Question

A local swimming pool charges nonmember $10 per visit. If you join the pool, you can swim for $5 per visit but you have to pay an annual fee of F. Use an optimal choice model to find the value of F such that you are indifferent between joining and not joining. Suppose that the pool charged you exactly that F. Would you go to the pool more or fewer times than if you did not join? For simplicity, assume that the price of all other goods is $1.

Answer 1

Answer:

The answer is below

Explanation:

Using an optimal choice model to find the value of F such that you are indifferent between joining and not joining.

Let N be the number of visits per year

1) N-number of visits per year 10N=5N+F

Given that 10N=5N+F

Hence F=5N

F = 5N

2) Therefore, Would I go to the pool more or fewer times than if i did not join?

Then, if F is fixed and I join the local Swimmng pool member, I would go more times.