ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The city of Smallville is considering whether to build a new public swimming pool.
This pool would have a capacity of 800 swimmers per day, and the proposed admission fee is $6 per swimmer per day. The estimated cost of the swimming pool, averaged over
the life of the pool, is $4 per swimmer per day.
Smallville has hired you to assess this project. Fortunately, the neighboring identical town of Springfield already has a pool, and the town has randomly varied the price of that pool
to find how price affects usage. The results from their study follow:
Swimming pool price per day
$8
$10
$4
$6
$2
Number of swimmers per day
500
200
1,100
800
1,400
a. If the swimming pool is built as planned, what would be the net benefit per day from the swimming pool? $
b. What is the consumer surplus for swimmers? $
c. Given the demand curve shown and the cost per swimmer (MC), the optimal pool size should accommodate
This will result in consumer surplus of $
per day
swimmers.
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Transcribed Image Text:The city of Smallville is considering whether to build a new public swimming pool. This pool would have a capacity of 800 swimmers per day, and the proposed admission fee is $6 per swimmer per day. The estimated cost of the swimming pool, averaged over the life of the pool, is $4 per swimmer per day. Smallville has hired you to assess this project. Fortunately, the neighboring identical town of Springfield already has a pool, and the town has randomly varied the price of that pool to find how price affects usage. The results from their study follow: Swimming pool price per day $8 $10 $4 $6 $2 Number of swimmers per day 500 200 1,100 800 1,400 a. If the swimming pool is built as planned, what would be the net benefit per day from the swimming pool? $ b. What is the consumer surplus for swimmers? $ c. Given the demand curve shown and the cost per swimmer (MC), the optimal pool size should accommodate This will result in consumer surplus of $ per day swimmers.
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