Due to the ongoing coronavirus pandemic in the United States, local governments are faced with a difficult decision: Should public swimming pools open for the summer, or should they remain closed? While some communities opt to keep their pools closed due to health concerns, others voice budgetary concerns. In this case study, we will take a look at the cost structure of public swimming pools and what role it may play in the decision to open or remain closed. 1. To get a sense of what operating costs public swimming pools face, we can consult feasibility studies. Read pages 57-61 in the City of Harrisburg's feasibility study and pages 55-57 in the City of Canton's feasibility study. Based on the information presented in these reports, what kind of expenses do public pools have? In your discussion of these costs, please also assess whether these costs are variable or fixed. 2. Read the section Economics of Pool Operations (p. 7) in the Williams Lake and District Pool feasibility study.

(a) Based on the information in this section, do you expect the average cost per swim to be increasing, decreasing, or U-shaped for the described capacities?

(b) The report states that the total cost for 132,200 swims is $995,280, or $7.53 per swim. Suppose you suspect that the cost function is linear and is of the form C(q) = F C + aq, where q denotes the number of swims, F C is the fixed cost and a is the variable cost per swim. Assuming that fixed costs account for 70% of the total cost for 132,200 swims, calculate F C and a to estimate the cost function.

3. Due to the coronavirus pandemic, some states guidelines allow pools to open at 25% capacity. Based on what you learned about the costs of pool operation in the previous questions, discuss how this restriction will affect operating costs per swim (average cost) and its effect on profitability