Suppose you are a stock market analyst specializing in the stocks of theme parks, and
you are examining Disneyland’s stock. 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?
To predict the impact of these events on ticket prices and attendance at Disneyland, we can use demand and supply analysis.
First, let's consider the new roller coaster and ride at Six Flags Magic Mountain. These new attractions provide an alternative entertainment option for tourists interested in theme parks. As a result, it may increase the demand for theme park experiences in general, potentially leading to increased attendance at Disneyland.
However, the Wall Street Journal reports that tourism has slowed down in the United States. This suggests that overall, the demand for theme park experiences may be decreasing due to various factors affecting tourism. Slower tourism can lead to a decrease in attendance at Disneyland.
Now, let's consider ticket prices. The Wall Street Journal also mentions that Disneyland has slashed ticket prices. This indicates that Disneyland is responding to the lower demand by reducing its prices in order to attract more visitors. Lowering ticket prices can be a strategy to stimulate demand and increase attendance.
Based on these factors, it is consistent with the prediction using demand and supply analysis that attendance at Disneyland may be somewhat lower. The decrease in attendance can be attributed to the slower tourism trend, despite the new attractions at Six Flags Magic Mountain. Disneyland's decision to lower ticket prices also supports this prediction, as it indicates a response to the decrease in demand.
Regarding the law of demand, the fact that both price and output were falling at Disneyland does not violate the law of demand. According to the law of demand, there is an inverse relationship between price and quantity demanded. As Disneyland reduced ticket prices, it aimed to increase demand and offset the decrease in attendance. Therefore, the law of demand is not violated in this scenario.