<span>The primary issue at Bond's Gym is that demand exceeds capacity. Therefore, implementing negative incentives is the most effective approach. Positive incentives would only attract more customers, worsening the situation. Negative incentives could benefit the owner by increasing revenue and enabling gym expansion to serve more clients.</span>
Presented options for this inquiry include: a. franchises; b. licenses globally; c. pays governments to market; d. contract manufactures. The right choice is d. contract manufactures. A contract manufacturer (CM) specializes in producing goods for a client based on specific requirements. Generally, these products are branded and appear as if they were made by the client rather than the CM. This relationship is advantageous for both parties, as clients save significantly on production and operational costs, while the manufacturers benefit from a consistent workload. Under such outsourcing arrangements, the manufacturer supplies all necessary facilities, materials, and labor for the client's product line.
The attached images demonstrate the solution to the problem clearly.
Economic Surplus: $12
Explanation: The economic surplus is calculated as the difference between benefit and cost. In this situation, as a math tutor, he earns $45 without incurring other costs. However, opting for a movie incurs a $12 cost. Therefore, the economic surplus is $12, the amount saved by choosing to be a math tutor over attending the movie.
