The theme park owners explain that the price increases are needed to cover the cost of constructing new and innovative rides, such as the Twister at Universal Studios, and Journey to Atlantis at Sea World. It is felt that consumers are willing to pay more if there is more to do, and they will return if there are new attractions. Furthermore, the increase in the minimum wage earlier in 1998 has contributed to the rise in admission fees. Some tourists complain about the cost. Nevertheless, the higher prices do not seem to deter visitors.
Questions Draw a supply and demand diagram for theme park admissions.
Show the equilibrium admission fee and number of admissions. Theme parks are facing higher costs. Show the effect on the equilibrium of the higher costs. Draw another supply and demand diagram for theme park admissions. Mark the initial equilibrium.