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I need help with Question A Travel Cost 2) Suppose that we observe people from three different zones going to a recreational site. People from
I need help with Question A
Travel Cost 2) Suppose that we observe people from three different zones going to a recreational site. People from zone A make a total of 200 trips which requires 40 miles round-trip travel. People from zone B make 150 trips which requires 80 miles round-trip travel, and people in zone C make 100 trips which requires 120 miles RT travel. Assume that there are equal #'s of people in each zone. Assume the only cost is travel, and it costs $0.25 per mile. The demand curve implied by the trips from the three zones is: P = 50 -.2Q a) b) d) Write out the demand and price schedule and draw and label the demand curve. What is the total consumers\" surplus? What is the WTP from each of the zones to take 100 trips? That is, what is the WTP from zone A to take 100 trips, what is the WTP from zone B to take 100 trips, and what is the WTP from zone C to take 100 trips. What if going to the site caused an externality (for instance causing beach erosion at a beach, or disturbing nesting birds while hiking or bird watching, etc.). If this externality costs society $25 per trip, what is the total cost to society of people visiting the site as in part (a)? What are the total net benets of visiting the site after considering the externality? Imagine setting a fee that would be charged to all visitors. What fee would exactly internalize the externality (what fee would make each visitor to behave as if they considered the externality their visit causes)? After charging this fee, how many people would Visit the site from each zone? How much damage in terms of the externality would occur? How much would be raised in fees? What is the amount of total net benefits? Compare your total net benets before and after internalizing the externality (compare your answers in parts ((1) and (e))Step by Step Solution
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