Consider the following data on travel costs to Whiteface Mountain, a tourist destination in the High...
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Consider the following data on travel costs to Whiteface Mountain, a tourist destination in the High Peaks region of the Adirondacks. Currently, the toll to drive up the mountain is $8. The following travel cost schedule includes this toll. Travel Cost ($) $8 $12 $20 $24 Number of trips/person/year 8 6 2 0 (a) Graph to scale the demand curve for trips (per person, per year) as a function of the "price" - the travel cost. Assume the demand curve is continuous and extends to both axes. Label your axes clearly. (b) Suppose there are 1,000 people with a travel cost of $8, 3,000 people with a travel cost of $12, 5,000 people with a travel cost of $20, and 6,000 people with a travel cost of $24. Calculate the consumers' surplus of each of the groups, and then add them together to get the total surplus. Show your work. (Recall that the area of a triangle is base*height.) (c) By how much will the total surplus change, if at all, if the toll is lowered from $8 to $4? (Assume again that there are 1000, 3000, 5000, and 6000 travelers in each of the groups, respectively.) Show your work. Consider the following data on travel costs to Whiteface Mountain, a tourist destination in the High Peaks region of the Adirondacks. Currently, the toll to drive up the mountain is $8. The following travel cost schedule includes this toll. Travel Cost ($) $8 $12 $20 $24 Number of trips/person/year 8 6 2 0 (a) Graph to scale the demand curve for trips (per person, per year) as a function of the "price" - the travel cost. Assume the demand curve is continuous and extends to both axes. Label your axes clearly. (b) Suppose there are 1,000 people with a travel cost of $8, 3,000 people with a travel cost of $12, 5,000 people with a travel cost of $20, and 6,000 people with a travel cost of $24. Calculate the consumers' surplus of each of the groups, and then add them together to get the total surplus. Show your work. (Recall that the area of a triangle is base*height.) (c) By how much will the total surplus change, if at all, if the toll is lowered from $8 to $4? (Assume again that there are 1000, 3000, 5000, and 6000 travelers in each of the groups, respectively.) Show your work.
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A The graph is plotted below Price 15 10 5 20 15 10 5 B Consumer surplus is basically the difference ... View the full answer
Related Book For
Accounting Texts and Cases
ISBN: 978-1259097126
13th edition
Authors: Robert Anthony, David Hawkins, Kenneth Merchant
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