An overlook in the state’s Scenic Park offers a spectacular view of Angel’s Lake and the surrounding countryside. The overlook is accessible to people in wheelchairs by a special park bus that takes about 60 minutes to reach the overlook. The overlook is accessible to people not in wheelchairs by a tram that takes 15 minutes to reach the overlook. During the most recent park season, 700 people in wheelchairs visited the park. A local economist has estimated that the demand schedule for overlook visits by people in wheelchairs is linear and has a price elasticity of demand equal to -0.75 Assume that people in wheelchairs value their recreational time at $12.50 per hour.
An overlook in the state’s Scenic Park offers a spectacular view of Angel’s Lake and the surrounding countryside. The overlook is accessible to people in wheelchairs by a special park bus that takes about 60 minutes to reach the overlook. The overlook is accessible to people not in wheelchairs by a tram that takes 15 minutes to reach the overlook. During the most recent park season, 700 people in wheelchairs visited the park. A local economist has estimated that the demand schedule for overlook visits by people in wheelchairs is linear and has a
Assume that people in wheelchairs value their recreational time at $12.50 per hour.
a. What is the annual benefit of making the tram accessible to people in wheelchairs?
b. Assume the tram modifications cost $12,000. Would the tram option be efficient
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