Question

Scenario: The owner of Bond's Gym wants your advice. He asks you if you think positive incentives would work better than negative incentives.

He is considering these options:

Raising or lowering prices
Applying discounts or fees
Offering exclusive memberships
Bond’s Gym should use
to help solve the problem.

If the owner of Bond’s Gym raises his prices, the quantity demanded for membership will most likely
.

If the owner of Bond’s Gym decides to raise his prices, he could make
money per monthly membership.

Answer 1

Bond’s Gym should use positive incentives (discounts, loyalty perks, exclusive memberships) to help solve the problem.

If the owner of Bond’s Gym raises his prices, the quantity demanded for membership will most likely decrease.

If the owner of Bond’s Gym decides to raise his prices, he could make more money per monthly membership (though total revenue will depend on how sensitive demand is to the price change).