1.The willingness to pay (WTP) for outdoor music concerts (which you can assume are public goods) is defined for three individuals in the figure below (per year).

a.What is the total WTP? (draw this on the graph, carefully)

b.If the cost of putting on a concert is $20 each, how many concerts will be provided if left to the market? Why?

c.At a cost of $20 per concert, what is the socially optimal number of concerts? Explain.

d.What is the dead weight loss (shade the area) if the answer to "b" is different than the answer to "c"? Explain.

e.If the concerts are held in a fenced area where entry can be restricted (and the fenced area is large enough so that outsiders cannot hear the music), and if a price charged to get in is $7.50 to cover some of the costs (the cost is still $20), could the optimal number of concerts be financed this way (could the entrance fees cover the costs)? Explain.

f. With the fenced-area approach, if the organizers charged only $5 as an entrance fee to pay for some of the costs such as utilities, security, etc., is there still a deadweight loss? What would create that DWL. Can you point out the DWL in this case? Explain your answer.