Suppose That 1,000 People Are Interested in Attending ElvisLand

question 5

Multiple Choice

Suppose that 1,000 people are interested in attending ElvisLand.Once a person arrives at ElvisLand, his or her demand for rides is given by x = max{6 - p, 0} , where p is the price per ride.There is a constant marginal cost of $3 for providing a ride at ElvisLand.If 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 $6 for admission
• B)$3 per ride and $4.50 for admission
• C)$0 per ride and $3 for admission
• D)$0 per ride and $7.50 for admission
• E)$6 per ride and $6 for admission

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Definitions:

Accounts Payable

The amount a company owes to suppliers or creditors for goods and services purchased on credit, represented as a liability on the balance sheet.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life.

Inventory Change

The difference in inventory levels between two time periods, reflecting purchases, sales, and usage.

Accrued Liabilities

Obligations that a company has incurred but not yet paid for, recognized in accounting to match expenses with the revenues they help to generate.