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The Children's Carousel in the municipal park in Lake Wobegon is evaluating its ticket prices and operating hours. It is open Friday through Tuesday during
The Children's Carousel in the municipal park in Lake Wobegon is evaluating its ticket prices and operating hours. It is open Friday through Tuesday during the summer months for 15 weeks. The following information pertains to last year's summer season. Costs are expected to remain the same for this year. Required: A) What is the unit cost basis (i.e., cost per rider) for establishing a long-run price for ride tickets? B) It is April, and the carousel has yet to open for the year. The manager, Hillary Grover Cleveland Clinton, wants to open the carousel all week, including Wednesdays and Thursdays. She is willing to do this as long as it doesn't decrease her overall profits for this year. A study suggests that attendance on these two days would average 200 riders daily, but that attendance on the other days of the week would drop by 50 per week. A special one-time promotion to advertise the Wednesday and Thursday hours will cost $1050. How much should the manager charge per ticket for Wednesdays and Thursdays this summer if she wants to break even from the decision to expand the hours of the carousel? In other words, her incremental profits this year from the expansion should be zero. How much should she charge on Wednesdays and Thursdays, if she keeps the current $6.50 ticket price for the other days of the week
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