suppose Ocean park hong kong carried out a renovation project in 2005.
the admission fee has increased by 40% to 50 %after the completion of the project .with the aid of a diagram,explain under what condition the increase in admission fee will raise the ocean park's total revenue
ECON 問題
2008-08-20 3:23 am
回答 (2)
2008-08-20 11:57 pm
Supply for Ocean Park Hong Kong does not change with price. (Change of Price does not change the Capacity of Ocean Park Hong Kong. Charateristics of Servicing industry).
Demand is in-elastic. Increase in price can increase the total revenue.
Demand is in-elastic. Increase in price can increase the total revenue.
2008-08-20 10:53 pm
As the prices raised by 40% to 50%, the supply curve would be moved up. Therefore, if the demand on ocean park ticket is inelastic ( a very steep demand curve), the upwards shift in supply curve would be resulted in lowering equilibrium quantity and higher equilibrium price, but the % increase in price is larger than % decrease in quantity, thus the total revenue would be raised.
2008-08-21 11:21:22 補充：
Please ignore the above passage and answer: as the demand on ocean park tickets are inelastic, the rise in selling price would lead to increase in total revene as the % increase in price is larger than % decrease in quantity.
2008-08-21 11:21:22 補充：
Please ignore the above passage and answer: as the demand on ocean park tickets are inelastic, the rise in selling price would lead to increase in total revene as the % increase in price is larger than % decrease in quantity.
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