The optimal prices for theme park admission in Table 5.4 are based on the assump- tion that admission fees are the only source of revenue for the park. However, the owner determines that visitors to the theme park spend an average of $12 per per- son on concessions, generating an average concession margin of $5 per person.

a. Single admission price with concessions

b. Individual daily prices under variable pricing policy with concession revenue

c. Impact on optimal prices from including concessions in optimization. Which prices are lower and

why?

d. Impact on total weekly margin from including concessions in optimization vs not including.

Note, in the base case the company still gains concession revenue even if it is not included in the

optimization

TABLE 5.4 Theme park daily prices, attendances, and revenues under constant pricing and under variable pricing SINGLE PRICE VARIABLE PRICING Day of week Price Attendance Revenue Price Attendance Revenue Sunday $25.00 1,000 $25,000 $33.87 1,000 $33,870 Monday $25.00 $6,250 $15.00 750 $11,250 Tuesday $25.00 400 $10,000 $17.50 700 $12,250 Wednesday $25.00 461 $11,535 $18.01 755 $13,590 Thursday $25.00 684 $17,105 $19.00 1,000 $19,000 Friday $25.00 1,000 $25,000 $27.00 1,000 $27,000 Saturday $25.00 1,000 $25,000 $38.33 1,000 $38,333 TOTAL 4,796 $119,890 6,205 $155,294 250