Question

Consider the following question:
1a) 0 trips will be made to a national park if travel cost is greater than $72 and 1800 trips per year will be made to the same park if travel cost is $0. What is the inverse demand function if total number of trips is the quantity variable and and travel cost is the price variable?

.1b) write out the new inverse demand function if 0 trips will be made to the park if travel cost is greater than $90 and 2250 trips will be made a year if travel cost is 0?

1c) what is estimated benefit of the NEW inverse demand function?

1d) If an admission fee of $10 per visit it charged for each scenario how many trips will be taken for scenario 1a and scenario 1b?

Answer 1

logy Trips(a) Price (P) so at p=0, q= 1800 0 772 and P072, q=0 1800 o so, P = 72 400 0-72 a 1800-0 on p=72 -0.049 Mris is the demand curve so, inverse demand curve is 0.04 q = 72-P on q = 1800 - 25p be now at p=90, 920 and p = 0, q=2250 So, Inneuse demand curve I q = atbp 2250-0 on q = 2250 + 0-90 cuq - 2250 - 25p o Newe inverse demand ensuee is greater than older one. So, consumes derrand more at previous price - d of admission fee is $10 pu visit. I then in 1a) q = 1800-23x10 = 1550 trips poor in 1b) q= 2250-25x10 = 2000 trips