Carlsbad State Beach has (inverse) daily demand on typical days of PT = 150 – 5QT where Q is number of vehicles admitted to the beach facilities. On weekends and holidays the demand increases to PH = 550 – 5QH. The marginal cost of maintaining the facilities is a constant $50 for each vehicle, and managers are required to charge no more than $50 per vehicles (no profits earned). The parking lot has a capacity of 75 spaces. Show your answers graphically. 

a. Find the number of vehicles in the parking area on typical day demand. Is the $50 parking fee efficient? Explain. 

b. Find the efficient number of vehicles to admit with weekend/holiday demand. What is the efficient price to charge? If the managers must keep price at $50, then what is the demand to get into the parking lot? How many vehicles are admitted? How are parking spaces rationed in this case? Explain.

Answer rating: 100% (QA)

Daily demand on typical days QT 30 02PT Weekendsholidays demand QH 11002PH Marginal Cost MC 50 Price ... View the full answer