Calculate the cutoff price and gross benefit, Accounting Basics

Bill is an avid angler. His favorite fishing location is Willow Lake, which supports year-round sport fishing. His monthly demand function for fishing at Willow Lake is given by x = 39 - 3p, where p is the round-trip cost of driving to the lake and parking there each time he goes fishing, and x is the number of fishing trips he chooses to take to Willow Lake per month.

(a) What is the cutoff price at which Bill would stop fishing at Willow Lake altogether?

(b) If the cost of fishing is $10 per trip, how many fishing trips to Willow Lake does Bill take per month?

(c) How much money does he spend per month on fishing at Willow Lake?

(d) What is Bill's net benefit (his consumer's surplus) from being able to fish at Willow Lake for $10 per trip rather than not being able to fish there at all? Draw a diagram to explain what you calculated.

(e) What is his gross benefit from fishing at Willow Lake, given the price of $10 per trip? Draw a diagram to explain what you calculated.

(f) What would his gross and net benefits be from fishing at Willow Lake if the cost of going there was zero? Draw a diagram what you calculated.

The State Fish & Game Commission decides to stock special game fish at Willow Lake which substantially improves the quality of fishing there. As a result, Bill's demand function to fish at Willow Lake changes and becomes x = 45 - 3p. However, there is no change in the cost of fishing there.

(g) What is the cutoff price at which Bill would now stop fishing at Willow Lake altogether?

(h) With the cost of fishing still being $10 per trip, how many fishing trips to Willow Lake does Bill now take per month?

(i) What is Bill's net benefit (his consumer's surplus) from now being able to fish at Willow Lake rather than not being able to fish there at all? Draw a diagram to explain what you calculated.

(j) Would you say that Bill is worse off, better off, or neither worse nor better off from being able to fish at Willow Lake than he was before the Fish & Game Commission started stocking special game fish at Willow Lake?

(k) What is the monetary measure of the change in Bill's welfare as you described it in (j)? Use a diagram to explain what you calculated.

Posted Date: 2/19/2013 5:11:21 AM | Location : United States







Related Discussions:- Calculate the cutoff price and gross benefit, Assignment Help, Ask Question on Calculate the cutoff price and gross benefit, Get Answer, Expert's Help, Calculate the cutoff price and gross benefit Discussions

Write discussion on Calculate the cutoff price and gross benefit
Your posts are moderated
Related Questions
what is assets and its type ?

1. Carmen Santiago works for a number of businesses as a  “consultant.” She has helped design accounting systems,  provided accounting services, and analyzed the financial  s

Balance Sheet Classi?cations and Relationships Shelley and Co. has the following balance sheet elements as of December 31, 2012. Land. . . . . . . . . . . . . . . . . . . . . . . $

How would I do this make it and adjustment account revenue 300.00 of supplies on hand 100.00 of unearned revenue is still unearned at the end of the month Accured salaries are 280

Q. Show double-entry procedure or duality? In every business transaction we record the total dollar amount of debits must equal the total dollar amount of credits. While we deb

I chose table 2-4 Loan Amortization Schedule, $100,000 at 6% for 5 years to discuss. Table 2-4 relates to the other two tables in that it is the opposite of the other two tables. T

State about the Cash payments journal A special journal used to record any payment of cash. There would be a check number given to be recorded in journal as well. Source docume

Q. Define Auditing? Auditing A business in quest of a loan or attempting to have its securities traded on a stock exchange typically must provide financial statements to suppor


Q. What is T-account? To exemplify recording the increases and decreases in an account texts use the T-account which appear like a capital letter T. The name of the account suc