Case 1 Florida’s theme parks increase prices.
Universal Orlando is raising its one-day, one-park adult ticket prices from $63 to $67 just days after Disney World also raised its prices. A Universal spokesman refused to comment on whether the price rise was in response to Disney’s announcement. Disney has raised its ticket prices twice this year. The latest increase takes an adult ticket to $67 – Universal has set exactly the same price.
Case 2 Carib Cement price adjustmentCaribbean Cement Company Limited has announced that from July the price of cement products would be adjusted by an average of 15%. The company blamed significant increases in input costs, such as electricity and oil prices. A spokesperson said, ‘The price rises were inevitable as when costs rise, our profits will decline unless prices are increased too.’ The company claims that its prices are still among the lowest in the region.
3. Identify the different pricing methods used in case 1 and case 2. [2 marks]
4. In case 1, explain two potential benefits to Universal of the company not increasing its prices following the decision by Disney World to increase its entry fee. [6 marks]
5. Under what circumstances might you recommend to the managing director of Carib Cement that the company should not increase its prices, despite higher costs. Explain your answer. [6 marks]
