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Homework answers / question archive / Suppose that Suffolk County faced with increases in the cost of maintaining public parks considers charging admission to Boston Common

Suppose that Suffolk County faced with increases in the cost of maintaining public parks considers charging admission to Boston Common

Accounting

Suppose that Suffolk County faced with increases in the cost of maintaining public parks considers charging admission to Boston Common. Furthermore, suppose that the County's investigation reveals that current maintenance costs for Boston Common amount to $500,000 per year, but that after adjusting for the annual cost of building and maintaining admission gates, an admission charge of $.50 per person would cause park maintenance costs to shrink to $400,000 per year. If you were a consultant to the county and had estimated the demand curve for Boston common to be:

QD = 1 - P

where, QD represents millions of admissions per year and P represents the admission charge, would you recommend that the county charge $.50 admission to the Common? Explain your answer carefully and identify the assumptions on which it is based. A graph might be helpful but is not essential or required.

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