The Walt Disney Company is in a position to use a two-part tariff policy in setting prices for admission and rides at Disney World. If this strategy resulted in maximum profit, Disney would convert all consumer surplus into profit
Which of the following explains why Disney does not maximize its profits from admission and rides?
A) Disney purposely charges less than the profit-maximizing price for admission to Disney World because it does not want to risk alienating its customers.
B) To maximize its profits, Disney would have to know the demand curves of each of its customers. Since this is not possible, Disney is not able to convert all consumer surplus into profit.
C) Disney purposely charges less than the profit-maximizing price for admission to Disney World in order to earn more profit from sales of food, lodging, and other related services.
D) Disney does not charge the profit-maximizing price for admission because it wants to keep admission affordable for children who will be more likely to visit Disney World when they become parents.
B
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A regulated firm is _________, but has no __________
a. a monopolist; control over prices b. privately owned; control over prices c. privately owned; board of directors d. a monopolist; board of directors e. fully autonomous; board of directors
What is the difference between an "increase in demand" and an "increase in quantity demanded"?
A) There is no difference between the two terms; they both refer to a shift of the demand curve. B) An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve. C) There is no difference between the two terms; they both refer to a movement downward along a given demand curve. D) An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve.