Question

The U.S. National Park Service wants to restrict the number of visitors to Yosemite National Park to L *, which is fewer than the current volume. It considers two policies: (1) raising the price of admissions and (2) setting a quota that limits the number of visits by in-state residents. Compare the effects of these two policies on consumer surplus and welfare. Use a graph to show which policy is superior by your criterion. Assume the figure at right illustrates the market for visits to Yosemite National Park, where the price floor is p and the quota is L*. The market is initially at an equilibrium at en First, show the effect of the price floor on consumer surplus and welfare. P. S per visit 1.) Using the point drawing tool, indicate the price consumers pay and the quantity they consume. Label this point 'ez' 2.) Using the rectangle drawing tool and the triangle drawing tool each once, shade in the change in consumer surplus as a result of the price floor. Attach the appropriate provided labels (CS Rectangle CS Triangle : CS Rectangle: or CS Triangle) 3.) Using the triangle drawing tool, shade in deadweight loss (DWL) or new surplus (NS) from the price floor. L* Q1 Q, Visits Attach the appropriate provided labels, where "+" indicates a positive change and "-" indicates a negative change. Carefully follow the instructions above and only draw the required objects.

Answer 1

S E2 DWL D Q1 Q,Visits P.$ per visit Rectangle

L is the quantity, P- is the price after the price floor.

Triangle blue area is Deadweight loss

Red area is loss of consumer surplus.