The Walt Disney Company is in a position to use a two-part tariff by charging for admission and also charging for rides inside its two theme parks, Disneyland and Disney World.Which of the following statements regarding Disney's pricing strategy is true?
A)At one time, admission fees were charged at both parks but all rides were free. Disney has since changed its pricing policy; it earns higher profits by charging for both admission and rides.
B)At one time, customers had to pay for admission and rides at Disneyland and Disney World. Disney has since changed its pricing policy; it earns higher profits by charging for admission but not for rides.
C)At one time, customers had to pay for admission and rides at Disneyland and Disney World. Disney has since changed its pricing policy; it earns higher profits by charging for rides but not for admission.
D)At one time, fees for admission and rides at both parks were set at their profit-maximizing levels. Disney has since changed its pricing policy; it uses a cost-plus pricing strategy for admission and does not charge for rides.

Question

Quizplus · Accepted Answer

The statement that is true is that "At one time, customers had to pay for admission and rides at Disneyland and Disney World. Disney has since changed its pricing policy; it earns higher profits by charging for admission but not for rides." This is known as a two-part tariff pricing strategy, where customers are charged separately for the gate admission and then again for any additional add-ons, such as rides within the park. This strategy allows for higher profits as it allows for the company to capture additional revenue from customers who are willing to pay more for the rides.

The Walt Disney Company Is in a Position to Use