Knoebels Amusement Park in Elysburg, Pennsylvania, charges an access fee, A, to enter its Crystal Pool. It also charges p per trip down the pool’s water slides. Suppose that 400 teenagers visit the park, each of whom has a demand function of q1 = 5 – p, and that 400 seniors also visit, each of whom has a demand function of q2 = 4 – p. Knoebels’ objective is to set A and p so as to maximize its profit given that it has no (non-sunk) cost and must charge both groups the same prices. What are the optimal A and p?
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