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The town council of Frostbite, Ontario, is trying to decide whether to build an outdoor skating rink which would cost $1.2 million and last for
The town council of Frostbite, Ontario, is trying to decide whether to build an outdoor skating rink which would cost $1.2 million and last for only one season. Operating costs would be zero. Yearly passes would be sold to anyone who wanted to use the rink. If p is the price of the pass in dollars, the number demanded would be q = 1600 - 0.8p. The council has asked you to advise them on building the rink. You should tell them that O revenues won't cover construction costs at any ticket price. There is no way to increase total consumer surplus by building the rink. 0 if the rink is built and price is set to maximize prots, the town makes a prot and consumers will be better off. 0 if the rink is built and price is set to maximize prots, the town makes a prot but consumers are worse off than without a rink. 0 there is no price at which ticket revenues cover costs but the total consumer surplus from the rink exceeds costs. 0 None of the above
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