microeconomics question?

Question

how do i go about solving this. where do i start. is there some type of formula. ive never taken an economics class and i am just confused.

The owner of a health club asks you for advice about whether the company should raise or lower the price of its membership this year based on the following information: last year the club raised the price of its membership by 5% and the number of members paying the same fee fell by 7%.

no answer just giving me a push in the right direction please.

Answer 1

I just started to take microeconomics and my thinking is you should look at law of supply chart. It almost seems that if the health club wanted to gain money he should lower his prices.

Answer 2

This is the classic value versus volume dilemma. Why increase price? To increase value of offering. A side effect of any price increase would be a decrease in volume. The opposite would also be true. The objective of the exercise is I believe to improve the ROI or profitability. So you need to crunch the numbers to determine the expected outcome. Hope this is of some use. Good Luck!