Assume there are two families in the community, Family A and Family B, who have the same income, same tastes, same number of adults and children, and face the same set of prices of all goods & services except that of access to an alpaca farm. Family A lives further away from the farm than Family B and hence incurs a higher travel cost per visit. There is no admission charge to enter the farm, however, the farm is considering limiting each family to a maximum of 20 per year. The following data summarise their annual visit to the alpaca farm:
Family |
Travel Cost per Visit |
Visits per annum |
A |
$40 |
10 |
B |
$20 |
30 |
Assume the inverse demand curve is linear, that is Cost = a + b*visit
If there is no annual limit of visits, the annual benefit to the community
The consumer surplus for Family A is $.
The consumer surplus for Family B is $.
The annual benefit to the community is $
If the farm imposes the annual limit for each family, the annual benefit to the community is $
Provide your answer to two decimal places and do not include the $ sign.
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