Question

Suppose that the amusement parkowner can practice perfect price discrimination by charging a different price for each ride. Assume that all rides have zero marginal cost and all consumers have the same tastes.
Will the monopolist do better charging for rides and setting a zero price for admission, or better by charging for admission and setting a zero price for rides?

Answer 1

The monopolist will do better by charging for admission and setting a zero price for rides. This is because the monopolist can maximize their profits by charging a higher price for admission and then allowing consumers to ride the rides for free. This way, the monopolist can capture the consumer surplus from the rides, while still charging a price for admission.