Answer to Question #59152 in Economics of Enterprise for JESSICA HOSEK

Question

Use the concept of the Elasticity of Demand to explain why Disney can charge up to 20% more during peak times.

Answer 1

As the demand for Disney products (Disneyland or some other that implied in this question) is inelastic especially in the peak times, then the increase in price will cause comparatively lower decrease in quantity demanded, which allows to earn higher revenues. That's why Disney can charge up to 20% more during peak times.