AEM 451/Econ 409
Suggested Solutions for Problem Set #5
Spring 2008
1) See the attached Excel spreadsheet for completed figures and calculations.
a) We can find the slope by looking at the change in visitation rate and travel costs
between any two zones.
For example, between zones 1 and 2, the visitation rate declines
by 0.02, and the cost increases by 5.
(0.02/10) = 0.002.
Then, we can use this slope to
find the intercept.
The travel cost in zone 1 is $10, and the visitation rate is 0.12.
If the
travel cost were $0, this would be a change of $10 x 0.002 = +0.02, so the visitation rate
would be 0.14.
Thus, our equation takes the exact form Vz=0.140.002(
Π
z+f)
b) To find the demand curve, we need to set f = 0,5,10,15, etc, and find the total visitation
from each zone.
Note that negative visits don’t make sense, so at some point you need to
replace negative values with zeroes when calculating total visits.
c) The consumer surplus can be calculated by summing the area of the rectangles and
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 Spring '08
 SHAWHAN,D.
 Economics, Supply And Demand, visitation rate

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