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Could you help me to solve the following economics problems The good folks at The Walt Disney Company have decided to open yet another resort

Could you help me to solve the following economics problems?

"The good folks at The Walt Disney Company have decided to open yet another resort. To complement their existing resorts of Disneyland, Walt Disney World, Tokyo Disney , Disneyland Paris, Hong Kong Disneyland, and Shanghai Disney, they have decided to open Midwest Disney, in the heart of central Illinois. Midwest Disney will feature the usual Disney fare: guests can ride the rapids in Splash Mountain, see the Pirates of the Caribbean, and stand in long lines to ride minor roller coasters. Disney's crack economists have estimated that the park will attract 100,000 people per day, and each person will take q = 50 - 50P rides, where P is the price per ride. Everyone who visits Midwest Disney is the "same" person and the marginal cost of each ride is essentially zero (so, treat MCride=0).

a) If Disney decides to set admission price at zero and simply charge monopoly price per ride, what is this price? How many rides per visitor? What is the profit per person (ignore fixed costs)?

b) Suppose, instead, that Disney decided to charge an entry fee. Disney could still charge for rides after the entry fee, but not necessarily. What is Disney's profit maximizing entry fee and price per ride? How many rides does each visitor take? What is the profit per visitor (again ignoring fixed costs)?"

Apr 23 2020 View more View Less

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