3. You are the manager of Fun World, a small amusement park. The accompanying diagram shows the...

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3. You are the manager of Fun World, a small amusement park.

The accompanying diagram shows the demand curve of a typical customer at Fun World.

a. Suppose that the price of each ride is $5. At that price, how much consumer surplus does an individual consumer get? (Recall that the area of a right triangle is 1⁄2 × the height of the triangle × the base of the triangle.)

b. Suppose that Fun World considers charging an admission fee, even though it maintains the price of each ride at $5.

What is the maximum admission fee it could charge?

(Assume that all potential customers have enough money to pay the fee.)

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Essentials Of Economics

ISBN: 9781429218290

2nd Edition

Authors: Paul Krugman, Robin Wells, Kathryn Graddy

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