Question

4. Refer to the open-access beach problem in the text of this chapter and table 6-2. If the cost per day rose to $15, how many people would maxi- mize the net benefits of the beach? And how many people would visit the beach under open access? Table 6-2 An Open-Access Resource: Public Beach Individual Aggregate marginal willingness Number of willingness visitors Total costs (TC) $12 24 36 48 60 72 84 96 108 120 Cost per visit $12 Aggregate WTP minus TC to pay $20 20 20 20 18 16 to pay (WTP) $20 40 60 80 90 96 98 96 90 80 24 32 30 24 4 12 6 12 10 8 8 12 .40

Answer 1

4 PEOPLE WOULD MAXIMIZE THE NET BENEFIT WHICH IS 20.

6 PEOPLE WILL VISIT THE BEACH UNDER OPEN ACCESS AS 7TH PERSON GOING IN IS RESULTING IN A NET LOSS IN BENEFIT OF $ -7. THIS GOES ON INCREASING i.e. BENEFIT GOES ON DECREASING.

visitors	indivudial marginal willingness to pay	aggregate marginal willingness to pay	cost per visit	total cost	agg wtp-cost
1	20	20	15	15	5
2	20	40	15	30	10
3	20	60	15	45	15
4	20	80	15	60	20
5	18	90	15	75	15
6	16	96	15	90	6
7	14	98	15	105	-7
8	12	96	15	120	-24
9	10	90	15	135	-45
10	8	80	15	150	-70
	NET BENEFIT	MAXIMUM NET BENFIT
	LOSS