Answer to Question #255253 in Economics of Enterprise for ARV

Question

Suppose you are a stock market analyst specialising in the stocks of theme parks, and you are examining Disneyland’s stocks. The Wall Street Journal reports that tourism has slowed down in the United States. At Six Flags Magic Mountain in Valencia, California, a new Viper roller coaster is now operating and another new ride, Psyclone, will be opening this year. 

Using demand and supply analysis, predict the impact of these events on ticket prices and attendance at Disneyland. As reported in The Wall Street Journal, Disneyland slashed ticket prices and admitted that attendance was somewhat lower. 

Is this consistent with your prediction using demand and supply analysis? 

In light of the fact that both price and output were falling at Disneyland, is the law of demand being violated in the world of fantasy?

Answer 1

The demand (Q) for a particular good does not depend solely on the product's price (P). Other functions also play a great role, especially the number of customers (N), the price of a complementary product (PC), the future expected price (PE), the customer preference (T), and the income (I). There are several consequences that result due to the changes in different factors. For example, people's expectation that the ticket's price will fall may lead to the fall of the current period demand. Besides, the decrease in the number of customers or the changes in the taste and preference in entertainment could contribute to the drop in the demand and price. Therefore, there is no law of demand violation in the scenario presented.