lim City is a town resided by slim people, with no health club in town. LA Fatness has estimated that the annual demand for their Fatness Club in this town to be Q = 160 - P. Every Club member has a marginal cost of $40, and the annual fixed cost of the business is $500 (assume a linear cost function).
1. LA Fatness starts the first Fatness Club in town. What is the optimum price and membership quantity?
2. What is the profit of the business at the optimum solution?