A local amusement park currently charges for each ride individually. However, they are thinking of moving to
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Question:
A local amusement park currently charges for each ride individually. However, they are thinking of moving to a pass that allows consumers to pay one price for unlimited use of all rides. The amusement park estimates that the typical consumer has a demand curve of Q = 50 - 2P (or P = 25 - 0.5Q), where Q is the quantity of rides and P is the price per ride.
Given this demand curve, answer the following questions:
- What is the most each visitor would be willing to pay for the amusement parks unlimited use pass?
- How much consumer surplus will that visitor have upon paying the price you found in part (1.)?
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