Analyzing Membership Prices at Bond's Gym

If Bond’s Gym set their membership price at $45, would they experience a shortage of memberships or a surplus of memberships, and by how many memberships?

The answer depends on a crucial information that it is not provided, the purchasing power of those potential customers, but it still it is possible to reason how the demand and supply of membership would work.

  • Surplus of memberships would take place when in the gym market there is a shortage of demand. This situation occurs when there are less customers willing to purchase the product at $45 than the number of memberships that are available. To claim if this is the case in the example we would need to know the structure of the demand function in this market.
  • Shortage of memberships takes place when in the gym market there is an excess of demand. The price is afforded by a number of customers which exceeds the amount of memberships available. Therefore, some rationing mechanism would be necessary to fix who will get the membership and who will not. Again, it would be necessary to know how the demand function works.
If Bond’s Gym set their membership price at $45, would they experience a shortage of memberships or a surplus of memberships, and by how many memberships? The answer depends on the purchasing power of potential customers and the structure of the demand function in the gym market. If there are more customers willing to purchase memberships at $45 than what is available, Bond's Gym would experience a shortage of memberships. If there are less customers than the number of memberships available, a surplus of memberships would occur.
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