PS3_spring20062

# PS3_spring20062 - EEP101/ECON125 Spring 2006 Problem set 3(Due Thursday March 16 in class Please write your name SID and Section number on each

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EEP101/ECON125 Spring 2006 Problem set 3 (Due Thursday, March 16 in class) Please write your name, SID and Section number on each page. Question1 (6 pts) Explain briefly the following terms a) Option Value (2 pts) b) Willingness to pay (WTA) (2 pts) c) Willingness to accept (WTP) (2 pts) Question 2 Public good (45 points) Please put a box around your answer Due to budget cuts, the East Bay Regional Park Authority is no longer able to cover the costs of maintaining Tilden Park. Officials are considering imposing a tax on Alameda County residents, and they hire you to estimate how much people are willing to pay. You estimate that each of Alameda Country’s six residents (which are all young students) has the following demand curve (each year) for Tilden Park: p 1 = 100-10A 1 , where A represents the number of open park acres. a) Calculate and graph the aggregate demand curve for Tilden park acreage. Be precise and show your work. (3 pts) b) Suppose the marginal cost of maintaining Tilden Park is \$180 per year and

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## This note was uploaded on 08/01/2008 for the course ECON 101 taught by Professor Wood during the Spring '07 term at University of California, Berkeley.

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PS3_spring20062 - EEP101/ECON125 Spring 2006 Problem set 3(Due Thursday March 16 in class Please write your name SID and Section number on each

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