People visit national parks because they want to experience the magnificence of nature in its unaltered primordial state. The problem is that the more people that come for this experience, the less unaltered nature there is. Suppose that there are N visitors to Yosemite National Park per day. Suppose also that the average consumer surplus (or utility) of a visit to the park per visitor in S is given by U(N,P) = 400 – (N/200) – P, where P is the price of admission. Assume that people will choose to visit the park as long as they have non-negative utility for the visit. Suppose also that the marginal cost (to the park) per visitor is 0, and that the park has no fixed costs. a. What is the demand function for visits to the park? b. Since U(N,P) is the average utility (or average consumer surplus) per visitor, when there are N visitors, what is the equation for Us(N,P), the total value of visitor (consumer) surplus for N visitors to the park in a given day with the price of admission to the park equal to P? c. In terms of P, what is the value of N that maximizes total visitor surplus? This will be an expression similar to N = A + (or -) bP, with actual numbers in place of A and b. How many visitors per day would maximize that surplus if admission were free (P-0)? How many people would actually visit the park (use the demand you calculated from part a) per day if admission were free? 1.
People visit national parks because they want to experience the magnificence of nature in its unaltered primordial state. The problem is that the more people that come for this experience, the less unaltered nature there is. Suppose that there are N visitors to Yosemite National Park per day. Suppose also that the average consumer surplus (or utility) of a visit to the park per visitor in S is given by U(N,P) = 400 – (N/200) – P, where P is the price of admission. Assume that people will choose to visit the park as long as they have non-negative utility for the visit. Suppose also that the marginal cost (to the park) per visitor is 0, and that the park has no fixed costs. a. What is the demand function for visits to the park? b. Since U(N,P) is the average utility (or average consumer surplus) per visitor, when there are N visitors, what is the equation for Us(N,P), the total value of visitor (consumer) surplus for N visitors to the park in a given day with the price of admission to the park equal to P? c. In terms of P, what is the value of N that maximizes total visitor surplus? This will be an expression similar to N = A + (or -) bP, with actual numbers in place of A and b. How many visitors per day would maximize that surplus if admission were free (P-0)? How many people would actually visit the park (use the demand you calculated from part a) per day if admission were free? 1.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education