Suppose That 3,500 People Are Interested in Attending ElvisLand

question 4

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{2 - p, 0} , where p is the price per ride.There is a constant marginal cost of $1 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)$1 per ride and $2 for admission
• B)$0 per ride and $1 for admission
• C)$1 per ride and $.50 for admission
• D)$0 per ride and $1.50 for admission
• E)$2 per ride and $2 for admission

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for some degree of market power and product differentiation.

Diffusion of Innovation

The process by which a new idea, product, or behavior spreads through a population or social system over time.

Product Line

A group of related products manufactured by a single company, often serving a particular customer segment or purpose.

Brand Extension

A strategy whereby a company uses an existing brand name to launch a product in a different category, leveraging the brand's established image and following.