A waterpark is the only one in a small town. Based on past summer season’s ticket sales, they estimate that the relationship between the monthly demand D (in persons) and price of a ticket p (in USD/person) in the town is described by p=44-0.0005 D. The waterpark has a monthly fixed cost of 100,000 USD and variable cost of 16 USD per person.
What is the revenue-maximizing level of demand? What is the ticket price at this level? What is the profit?
What is the profit-maximizing level of demand? What is the ticket price at this level? What is the profit?
Compare and comment on the demand, price, and profit levels you found in parts (a) and (b).
What is the profitable range of demand? Does this range change if the park has a maximum seating capacity of 40000 people/month?
Draw and Excel plot of revenue, cost, and profit versus demand D and depict the locations of the relevant values you found in parts (a), (b), and (d) above.