A collaborative federal and state program has been proposed in response to acid rain damage in Newport Bay, Maryland. To estimate the incremental benefits of the program, you use the travel cost method based upon the following pre- and post-policy recreational demand functions:
Pre-policy: P = 62 - 0.02V₁ Post-policy: P = 80 - 0.02V₂,
where V is the number of visitors (in thousands) and P is the admission fee. Assume the admission fee is set at $20 per visitor. Use this information for any or all of Questions.
-The number of pre- and post-policy visitors, V₁ and V₂, (in thousands) is ____ and _____, respectively.

Question

Quizplus · Accepted Answer

The correct answer is A because the number of pre- and post-policy visitors, V₁ and V₂, (in thousands) is 2,100 and 3000, respectively. This can be calculated by solving the pre- and post-policy demand functions for V when P = $20.

A Collaborative Federal and State Program Has Been Proposed in Response