Draw the demand curve of marginal benefit, Cost Accounting

The total demand (marginal benefit) curve for visiting Yosemite is as follows: Price = 5000-10*NumberOfTrips -10*TonsOfVisibleTrash.

a. Suppose the quantity of trash=100 tons. Draw the demand curve below, being sure to label the axes and the slope and intercept appropriately.

b. Does the quantity of trash increase or decrease the willingness to pay for an additional trip?

c. Suppose the park charges an entrance fee of $100. What is the total net benefit to consumers who visit the park (the "consumer surplus") if this is the only travel costs (all other costs of the trip are zero)? In answering this question, continue to assume that the quantity of trash remains 100 tons.

d. Now assume the park implements a cleanup program to reduce the trash in the park to 20 tons. Assuming the entrance fee from c) remains the same, what is the new consumer surplus? What was the economic benefit to park visitors from the cleanup program?

 

Posted Date: 3/30/2013 5:22:36 AM | Location : United States







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