Disneyland Has Two Possibilities for Pricing Rides at Its Theme

question 13

Short Answer

Disneyland has two possibilities for pricing rides at its theme parks: (1)Set MR = MC for each ride and charge the maximum price consumers will bear.(2)Charge an admission fee to the theme park but allow unlimited rides for free.Using graphs, show which pricing scheme is more profitable for Disneyland.

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Definitions:

Purely Competitive Industry

An industry characterized by many firms offering identical products where no single firm can influence the market price.

Normal Profit

The minimum level of profit needed for a company to remain competitive in the market, typically considered as the cost of doing business, including opportunity costs.

Quantity Demanded

The amount of a good or service that consumers are willing and able to purchase at a given price over a specified period of time.

Market Price

The current price at which a good or service is bought and sold in a market, determined by the interplay of supply and demand.