The Metropolis city council is trying to decide whether to let a new business, Lexcorp, cut down a local forest. The city council has asked you to help determine the value the town places on the forest. You conduct a stated preference survey. When asking if people would be willing to pay $70 to preserve the local forest, 15% respond 'yes'. When asking if people would be willing to pay $20, 65% of people respond yes. There are 50,000 people in the city. a. What is the average individual's demand curve for the forest, based on your survey? b. Based on your survey, what's the expected benefit to each individual of having free access to the forest? c. The people of the city currently have free access to the forest. Lexcorp is offering 1,800,000 to cut down the forest. Should the city council accept the offer, given the implied value the whole town places on free access to the forest?

The Metropolis city council is trying to decide whether to let a new business, Lexcorp, cut down a local forest. The city council has asked you to help determine the value the town places on the forest. You conduct a stated preference survey. When asking if people would be willing to pay $70 to preserve the local forest, 15% respond 'yes'. When asking if people would be willing to pay $20, 65% of people respond yes. There are 50,000 people in the city. a. What is the average individual's demand curve for the forest, based on your survey? b. Based on your survey, what's the expected benefit to each individual of having free access to the forest? c. The people of the city currently have free access to the forest. Lexcorp is offering 1,800,000 to cut down the forest. Should the city council accept the offer, given the implied value the whole town places on free access to the forest?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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