doubt on pareto efficiency

[riyaf]

25.8 (0) Col. Tom Barker is about to open his newest amusement park,
Elvis World. Elvis World features a number of exciting attractions: you
can ride the rapids in the Blue Suede Chutes, climb the Jailhouse Rock
and eat dinner in the Heartburn Hotel. Col. Tom gures that Elvis World
will attract 1,000 people per day, and each person will take x = 50−50p
rides, where p is the price of a ride. Everyone who visits Elvis World is
pretty much the same and negative rides are not allowed. The marginal
cost of a ride is essentially zero.

(e) What is the Pareto ecient price of a ride? Zero.
(f) If Col. Tom charged the Pareto ecient price for a ride, how many
rides would be purchased? 50.

[Granpa Simpson]

Wats the doubt..??..the answers are given 0 and 50..use necessary condition for Paretto efficiency and you will get the answer...!!!!!

[SoniaKapoor]

Subhayu..pls explain me the soln...m not getting it

[Granpa Simpson]

The necessary condition for paretto efficiency is perfect competition...so use p=MC, which gives 0 price, now put p=0 and obtain the value of q as 50...!!!!

[Arushi :))]

Hey ,
this person is a monopolist and hence he is charging according to MR= MC.
Monopoly outcome is not efficient because both can be made better off
But the pareto efficient outcome is in perfect competition
where P= MC,Mc is given to be zero.
Hence, pareto efficient price is zero
x= 50-50p= 50

[Arushi :))]

@subhayu
we replied at the same time :D

[Granpa Simpson]

@Arushi;...

[The Villain]

Thanku subhayu and arushi

[SoniaKapoor]

thanxx guysss