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Suppose the government is considering increased spending on maintaining a national park. You have been hired...

  1. Suppose the government is considering increased spending on maintaining a national park. You have been hired to evaluate the benefits of this proposal as part of a benefit-cost analysis. Use the travel cost approach to accomplish this goal, based on a $20 admission fee to the park and the following before and after recreational demand functions where Qd is the number of visitors in thousands and P is the admission fee:

Before new-spending policy: P = 72 - 0.04Qd

After new-spending policy: P = 90 - 0.04Qd

Draw a diagram showing the before and after-spending demand functions and compute the estimated benefit of the increased spending on maintaining the park.

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