Enchanted Kingdom (EK) has higher demand during Christmas (D1 = P1 = 20 - 0.02Q1) than in other months (D2 = P1 = 2 - 0.002Q2); where Q = number of customers. The cost is the same for all months (C = Q + 0.002Q2 ). (a) What type of pricing scheme can EK use in order to control the number of customers and to ensure it is self-supporting. Compute for P1, P2, Q1 and Q2 in this pricing scheme. (b) Is it profitable for EK to employ uniform pricing scheme for all months? Why or why not?
Enchanted Kingdom (EK) has higher demand during Christmas (D1 = P1 = 20 - 0.02Q1) than in other months (D2 = P1 = 2 - 0.002Q2); where Q = number of customers. The cost is the same for all months (C = Q + 0.002Q2 ). (a) What type of pricing scheme can EK use in order to control the number of customers and to ensure it is self-supporting. Compute for P1, P2, Q1 and Q2 in this pricing scheme. (b) Is it profitable for EK to employ uniform pricing scheme for all months? Why or why not?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Topic: Pricing with Market Power
Instructions: Show complete computations and label all graphs properly/accurately.
(1) Enchanted Kingdom (EK) has higher demand during Christmas (D1 = P1 = 20 - 0.02Q1) than in other
months (D2 = P1 = 2 - 0.002Q2); where Q = number of customers. The cost is the same for all months (C
= Q + 0.002Q2
).
(a) What type of pricing scheme can EK use in order to control the number of customers and to ensure
it is self-supporting. Compute for P1, P2, Q1 and Q2 in this pricing scheme.
(b) Is it profitable for EK to employ uniform pricing scheme for all months? Why or why not?
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