Suppose That 3,500 People Are Interested in Attending ElvisLand

question 7

Multiple Choice

Suppose that 3,500 people are interested in attending ElvisLand. Once a person arrives at ElvisLand, his or her demand for rides is given by x = max{ 7 - p, 0} , where p is the price per ride. There is a constant marginal cost of $3 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) $3 per ride and $7 for admission
• B) $0 per ride and $4 for admission
• C) $0 per ride and $11 for admission
• D) $3 per ride and $8 for admission
• E) $7 per ride and $7 for admission

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Definitions:

Pricing

The process of determining the value that will be charged for a product or service, taking into account costs, market conditions, and customer perception.

Store-based Retailers

Store-based retailers operate physical locations where customers can browse and purchase goods in person, offering a tangible shopping experience.

Internet Channel

Digital pathways through which information, goods, or services are delivered over the internet, including websites, email, and social media.

Merchandise

Goods to be bought and sold.