Question

legoland is implementing a new type of pricing. when demand increases and more customers visit the parks, the price will increase. when demand dips during the slow season, prices will decrease. this is a way to help balance out supply and demand. what is another name for the type of pricing that legoland is using?

Answer 1

Legoland is implementing a dynamic pricing strategy where prices fluctuate based on demand. Elastic and inelastic demand indicate how changes in price affect total revenue, with unitary elasticity being a state where revenue stays constant despite price adjustments.

Step-by-step explanation:

The type of pricing that Legoland is using is known as dynamic pricing. This pricing strategy adjusts prices on the go based on the current demand for the product or service. When demand is high, such as during peak tourist seasons, prices go up. Conversely, during times of lower demand, such as the off-season, prices can decrease. Businesses use price elasticity of demand to determine how changes in price will affect their total revenue. If demand is elastic, lowering prices can lead to a larger percentage increase in sales volume, thus increasing total revenue. Conversely, if demand is inelastic, a price increase might lead to a smaller decrease in quantity sold, also increasing total revenue. A situation of unitary elasticity suggests that total revenue remains unchanged with moderate price changes.