Knoebels Amusement Park in Elysburg, Pennsylvania, charges a lump-sum fee, L, to enter its Crystal Pool. It also charges p per trip down a slide on the pool’s water slides. Suppose that 400 teenagers visit the park, each of whom has a demand function of q1 = 5 – p, and that 400 seniors also visit, each of whom has a demand function of q2 = 4 – p. Knoebels’ objective is to set L and p so as to maximize its profit given that it has no (non-sunk) cost and must charge both groups the same prices. What are the optimal L and p?

Let the number of teenager visit the park= 400 Demand function of each teenager; q1=5-p Let the…

Answered: Knoebels Amusement Park in Elysburg,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Knoebels Amusement Park in Elysburg, Pennsylvania, charges a lump-sum fee, L, to enter its Crystal Pool. It also charges p per trip down a slide on the pool’s water slides. Suppose that 400 teenagers visit the park, each of whom has a demand function of q₁ = 5 – p, and that 400 seniors also visit, each of whom has a demand function of q₂ = 4 – p. Knoebels’ objective is to set L and p so as to maximize its profit given that it has no (non-sunk) cost and must charge both groups the same prices. What are the optimal L and p?

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