Suppose Bang Bang is the only local swimming pool. She believes that there are 10 potential customers. Each of them has anidentical demand function of QI = 250 – 0.02P, with QI as the unit of services of each customer. She operates with a constant variable cost of $500 per unit of service.
In reality, demand from different customers may not be identical. Discuss how this might create problems to Bang Bang in conducting a two-part tariff.
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