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practiceproblems5

practiceproblems5 - 1 Practice Problems Week 5 Consider a...

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1 Practice Problems Week 5 Consider a ski resort. Let Q be the quantity of running lifts in the resort. How would you characterize the type of good being offered: is it rivalrous? excludable? Suppose there are two types of snowboarders: type 1, who go up once, twice a year, and type 2, who go up every weekend. Suppose the demand for running lifts is: D 1 = 20 - Q D 2 = 45 - Q If there are 6 people of type 1 and 4 people of type 2, what’s the total demand? The marginal cost of building the resort with Q lifts is MC = 20 Q . Suppose a benevolent government owns the ski resort and would like to build it for as many folks as would be socially efficient. How many lifts does the government build? What would be the entry fee? Now a monopolist owns the resort and charges an entry fee. How many lifts and at what entry fee?

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2 Solutions Consider a ski resort. Let Q be the quantity of running lifts in the resort. How would you characterize the type of good being offered: is it rivalrous? excludable?
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