For the purposes of experimentation Six Flags raised prices

For the purposes of experimentation, Six Flags raised prices of tickets from $29.00 to $39.00 and then measured by how much sales changed. They found that profits increased using one month’s worth of data; however, over time Six Flags decided to revert ticket prices back to $29.00. Why do you believe Six Flags made this choice?

Solution

In the short run, Firm can maximize profits by increasing its price sudden. But to survive for long in the business, prices have to be under control so that society as a whole can benefit. With the increase in price in competitive markets, Demand will reduce as the people have many alternate options. Therefore, total expenditure of consumers on Highly priced items will reduce and accordingly the profits of producer making those highly priced items will also decrease with the passage of time. That\'s why Six Flags decided to revert ticket prices back to original ( $29.00) to stay and survive sound in the business arena.