Question

The management at MooseWoods Park is trying to decide whether to install flush toilets at the MooseWoods Campground, as well as how many flush toilets to install (if they choose to install them). They concluded that they will install flush toilets if the total surplus is greater than $50 (in relation to the number of flush toilets at the equilibrium and the cost per campsite per night). Installing flush toilets will involve an increase in the cost per campsite per night. Researchers have calculated the demand and supply curves for flush toilets at this park. At $35 per campsite per night, no one will want flush toilets. At $0 per campsite per night, campers will demand 7 flush toilets. Managers are willing to supply no flush toilets at the current campsite cost of $5 per night, but are willing to supply 8 flush toilets at $25 per campsite per night. Please use the supply, demand and total surplus information to answer the following three questions:

1. What is the number of flush toilets desired at the equilibrium point?

2. What is the total surplus?

3. Will the managers install the number of flush toilets determined in Question 1?

Answer 1