Question
The Asterix theme park can serve at most 1,000 people per day. The park charges an admission fee, and all rides are free. If p
The Asterix theme park can serve at most 1,000 people per day. The park charges an admission fee, and all rides are free. If p is the price of admission on day i, the demand will be Di(p). The table below displays the demand curves for each day.
Suppose the theme park charges the same admission price on all days. Use the table above to identify a revenue maximizing price.
Suppose the park were free to charge a different price on each day and the demands on each day were independent of each other. What price on each day should be charged to maximize revenue?
Table 1: Demand Functions for the Asterisk Theme Park |
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Now suppose the demands on each day are not independent. A customer planning to attend on day i may choose to attend on day j instead if the price difference is large enough. In particular, for every $1 difference in price, 8 customers will shift days. For example, suppose the base prices for Monday, Tuesday and Wednesday are $20, $22 and $24 respectively. First compute D1(20), D2(22) and D3(24). The actual demand on Monday will be D1(20) + 2 8+48 and the actual demand on Tuesday will be D2(22)28+28. In other words, the $2 difference in price between Monday and Tuesday, means that 2 8 people will shift from Tuesday to Monday. The $2 difference in price between Tuesday and Wednesday, means that 2 8 people will shift from Wednesday to Tuesday. Under this assumption find revenue maximizing daily prices.
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