Camping at Wilson's Promontory, a national park in Victoria, isn't free, but for many years now not everyone who wants to camp at Wilson's Promontory during the Christmas holidays can be accommodated, and the allocation of camping spots is settled by a lottery.
a. Could the market for campsites in Wilson's Promontory during the Christmas season be described as a market in equilibrium? Explain why or why not with the aid of a diagram. (Note: draw the supply curve of campsites as a vertical line as the number of campsites is determined administratively with concern for the environment in mind. The supply of campsites is therefore not influenced by the price of campsites)
b. As an alternative to rationing by lottery, what price adjustment can the park administrators make to deal with the holiday season shortage of campsites at the current price?
c. Compare the relative merits of lotteries and price adjustments as rationing methods. How should campsites at Wilson's Promontory be allocated among demanders?