Suppose That 2,500 People Are Interested in Attending ElvisLand

question 9

Multiple Choice

Suppose that 2,500 people are interested in attending ElvisLand. Once a person arrives at ElvisLand, his or her demand for rides is given by x = max{ 3 - p, 0} , where p is the price per ride. There is a constant marginal cost of $2 for providing a ride at ElvisLand. ElvisLand charges a profit-maximizing two-part tariff, with one price for admission to ElvisLand and another price per ride for those who get in. How much should it charge per ride and how much for admission?

• A) $2 per ride and $3 for admission
• B) $0 per ride and $2.50 for admission
• C) $2 per ride and $.50 for admission
• D) $0 per ride and $1 for admission
• E) $3 per ride and $3 for admission

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Definitions:

Peripheral Route

One of the two paths of persuasion according to the Elaboration Likelihood Model, where people are influenced by superficial cues rather than detailed message content.

Tangentially Relevant

Pertains to a matter or subject that is slightly or indirectly related to the core issue or focus.

Statistics

The science dealing with the collection, analysis, interpretation, and presentation of numerical data.

Dissonance Theory

A psychological theory suggesting that individuals experience discomfort (dissonance) arising from inconsistent beliefs, attitudes, or behaviors and are motivated to reduce this discomfort by changing them to achieve consistency.