Suppose you work for North Dakota DNR Grand Forks office. DNR would like to know whether they should set aside some conservation land, previously slated to be logged, for a potential state park. You are helping do a travel-cost analysis to estimate the benefits of the set-aside. You collected data from 500 visitors who came to a state park in a neighboring state. You ran regression analysis and controlled for these visitors' age, income, education, employment status, and other important factors that might affect the number of visits. With all the information, you have developed the following relationship: Cost to Visit # of Visits Per Person Per Year (a) (b) $20 $40 $80 8 62 6 2 Graph the demand curve for the number of visits as a function of the "price" -- the travel cost. Based on demographic information about the people living in the vicinity of the proposed park, you have estimated that 10,000 people will take an average of 4 visits per year. For the average person, calculate: (1) The consumer surplus (CS) for a single visit to the new park by a visitor with travel costs of $20; (2) The total consumer surplus for an average visitor (hint: the area of a triangle is 1/2(B*H)); (3) The total expected consumer surplus per year from the proposed new park.
Suppose you work for North Dakota DNR Grand Forks office. DNR would like to know whether they should set aside some conservation land, previously slated to be logged, for a potential state park. You are helping do a travel-cost analysis to estimate the benefits of the set-aside. You collected data from 500 visitors who came to a state park in a neighboring state. You ran regression analysis and controlled for these visitors' age, income, education, employment status, and other important factors that might affect the number of visits. With all the information, you have developed the following relationship: Cost to Visit # of Visits Per Person Per Year (a) (b) $20 $40 $80 8 62 6 2 Graph the demand curve for the number of visits as a function of the "price" -- the travel cost. Based on demographic information about the people living in the vicinity of the proposed park, you have estimated that 10,000 people will take an average of 4 visits per year. For the average person, calculate: (1) The consumer surplus (CS) for a single visit to the new park by a visitor with travel costs of $20; (2) The total consumer surplus for an average visitor (hint: the area of a triangle is 1/2(B*H)); (3) The total expected consumer surplus per year from the proposed new park.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose you work for North Dakota DNR Grand Forks office. DNR would like to know whether they
should set aside some conservation land, previously slated to be logged, for a potential state park. You
are helping do a travel-cost analysis to estimate the benefits of the set-aside.
You collected data from 500 visitors who came to a state park in a neighboring state. You ran
regression analysis and controlled for these visitors' age, income, education, employment status, and
other important factors that might affect the number of visits. With all the information, you have
developed the following relationship:
(a)
(b)
Cost to Visit
$20
$40
$80
# of Visits
Per Person Per Year
8
6
2
Graph the demand curve for the number of visits as a function of the "price" -- the travel cost.
Based on demographic information about the people living in the vicinity of the proposed park,
you have estimated that 10,000 people will take an average of 4 visits per year. For the average
person, calculate:
(1) The consumer surplus (CS) for a single visit to the new park by a visitor with travel costs of
$20;
(2) The total consumer surplus for an average visitor (hint: the area of a triangle is 1/2(B*H));
(3) The total expected consumer surplus per year from the proposed new park.
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