The Walt Disney Company Is in a Position to Use

question 241

Multiple Choice

The Walt Disney Company is in a position to use a two-part tariff policy in setting prices for admission and rides at Disney World.If this strategy resulted in maximum profit, Disney would convert all consumer surplus into profit.Which of the following explains why Disney does not maximize its profits from admission and rides?

• A)To maximize its profits, Disney would have to know the demand curves of each of its customers. Since this is not possible, Disney is not able to convert all consumer surplus into profit.
• B)Disney purposely charges less than the profit-maximizing price for admission to Disney World because it does not want to risk alienating its customers.
• C)Disney purposely charges less than the profit-maximizing price for admission to Disney World in order to earn more profit from sales of food, lodging, and other related services.
• D)Disney does not charge the profit-maximizing price for admission because it wants to keep admission affordable for children who will be more likely to visit Disney World when they become parents.

Identify the requirements for a valid warranty claim under the Uniform Commercial Code (UCC).

Differentiate between warranty of merchantability and warranty of fitness for a particular purpose.

Recognize the role and limitations of the "caveat emptor" principle in modern commercial law.

Apply the theory of product liability and understand the conditions under which a party can be held liable.

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Definitions:

Factory Rent

The cost incurred for the space leased or rented to operate a manufacturing or production facility.

Direct Costs

Costs that can be directly attributed to the production of specific goods or services, such as labor or materials.

Cost Object

Any item for which costs are measured and assigned, including products, services, projects, or customers.

Manufacturing Costs

The total expenses related to producing goods, including raw materials, labor, and overhead expenses.