Please show a separate supply and demand diagram for a,b,c,d clearly label FRA, WTP, Consumer Surplus, Producer Surplus and Social Welfare for the intial WQ level as well as P* and Q* for each: (a) In the diagram below, show and explain the initial level of forest recreation area (FRA) when there is no price charged for using it (i.e., it is free). Show/explain the total willingness to pay (WTP), consumer surplus (CS), producer surplus (PS), and social welfare (SW) for the initial WQ level. (b) In a new diagram, show what happens to WTP, CS, PS, and SW as FRA deteriorates (e.g., the supply of FRA becomes smaller from development). Then in another diagram, show/explain what happens to WTP, CS, PS, and SW as population grows. (c) Suppose a perfectly competitive market was created for FRA. In a new diagram, show/explain what happens to the FRA level, Price, WTP, CS, PS, and SW. Compare your answers to part (a). (d) Suppose that, instead of a market for FRA, the government regulated supply at the same level that would occur in a perfect market. Show the total benefits and costs of this regulation (moving from part a to part d). Here, Benefits = increased area under the demand curve, and Costs = increased area under the supply curve. What are the net benefits?
Please show a separate supply and demand diagram for a,b,c,d clearly label FRA, WTP,
(a) In the diagram below, show and explain the initial level of forest recreation area (FRA) when there is no price charged for using it (i.e., it is free). Show/explain the total willingness to pay (WTP), consumer surplus (CS), producer surplus (PS), and social welfare (SW) for the initial WQ level.
(b) In a new diagram, show what happens to WTP, CS, PS, and SW as FRA deteriorates (e.g., the supply of FRA becomes smaller from development). Then in another diagram, show/explain what happens to WTP, CS, PS, and SW as population grows.
(c) Suppose a
(d) Suppose that, instead of a market for FRA, the government regulated supply at the same level that would occur in a perfect market. Show the total benefits and costs of this regulation (moving from part a to part d). Here, Benefits = increased area under the demand curve, and Costs = increased area under the supply curve. What are the net benefits?
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