Happy Valley is the only available camping area in Rural County. It is owned by the county,

Question:

Happy Valley is the only available camping area in Rural County. It is owned by the county, which allows free access to campers. Almost all visitors to Happy Valley come from the six towns in the county.
Rural County is considering leasing Happy Valley for logging, which would require that it be closed to campers. Before approving the lease, the county executive would like to know the magnitude of annual benefits that campers would forgo if Happy Valley were to be closed to the public.
An analyst for the county has collected data for a travel cost study to estimate the benefits of Happy Valley camping. On five randomly selected days, he recorded the license plates of vehicles parked overnight in the Happy Valley lot. (As the camping season is 100 days, he assumed that this would constitute a 5 percent sample.) With cooperation from the state motor vehicle department, he was able to find the town of residence of the owner of each vehicle. He also observed a sample of vehicles from which he estimated that each vehicle carried 3.2 persons (1.6 adults), on average. The following table summarizes the data he collected:

In order to translate the distance traveled into an estimate of the cost campers faced in using Happy Valley, the analyst made the following assumptions. First, the average operating cost of vehicles is $0.12 per mile. Second, the average speed on county highways is 50 miles per hour. Third, the opportunity cost to adults of travel time is 40 percent of their wage rate; it is zero for children. Fourth, adult campers have the average county wage rate of $9.25 per hour.
The analyst has asked you to help him use this information to estimate the annual benefits accruing to Happy Valley campers. Specifically, assist with the following tasks:
a. Using the preceding information, calculate the travel cost of a vehicle visit (TC) from each of the towns.
b. For the six observations, regress visit rate (VR) on TC and a constant. If you do not have regression software available, plot the points and fit a line by sight. Find the slope of the fitted line.
c. You know that with the current free admission, the number of camping visits demanded is 14,160. Find additional points on the demand curve by predicting the reduction in the number of campers from each town as price is increased by $5 increments until demand falls to zero. This is done in three steps at each price: First, use the coefficient of TC from the regression to predict a new VR for each town. Second, multiply the predicted VR of each town by its population to get a predicted number of visitors. Third, sum the visitors from each town to get the total number of predicted visits.
d. Estimate the area under the demand curve as the annual benefits to campers.

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...