Posted: February 11th, 2022
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The market demand and supply equations for theme park in a city are given by P = 30 – 0.005QD and P = 10 + 0.005QS, where P is the price in dollars and QD is the quantity of theme-park tickets demanded and QS is the quantity of theme park ticket supplied.
(i) Solve for the equilibrium price and quantity of theme park tickets and compute the consumer surplus and producer surplus. Support your answers with a graph of the theme park tickets market. (10 marks)
(ii) Explain the implications of the welfare of consumers, producers and the society when the price of theme park ticket is fixed at $15. Support your answers with a graph of the theme park tickets market. (20 marks)
(b) The availability of alternative entertainment methods has resulted in a large decrease in theme-park visitors. To help the theme-park operators, the government is contemplating imposing a price floor for theme-park tickets or provide a subsidy to theme park visitors.
Appraise the welfare effects of these two policies with suitable theme-mark market diagrams. Your diagrams should take into consideration of the price elasticity of demand and supply of theme-park in general. (Note: Part (b) is not link to Part (a)) (70 marks)Please read the requirements and provide graph and explanation. i got my answers for q1ai, p = 20, q = 2000. CS= 10,000 and PS= 20,000. will need to verify the graph. Also for part ii) and question b, need graph and explanation.
Requirements: with graph and explanation | .doc file
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