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Thursday, June 02, 2005

Demand curves are downward sloping!!

From Amusement Business News:
Despite an 8% decline in attendance, Cedar Fair Lp. reported that revenue for the first five months of the year at its 12 properties rose about 5% when compared to the 2004 period.

A 6% increase in average in-park guest per capita spending and a 31% jump in out-of-park revenue, including resort hotels, helped the Sandusky, Ohio-based company withstand about 145,000 fewer visits at its seven amusement parks and five waterparks.

Let's see. Raise prices, quantity demanded drops, but revenues increase. Does this imply that the company was pricing in the inelastic portion of it's demand curve? It would be consistent with second-degree price discrimination, that is pricing access lower to get more people to show up and then spend more inside the parks.

Not enough information in the story to really tell, but it seems likely.

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