Suppose I'm a member of the Arizona Student Government, and I propose that we turn the quad into a water slide park, offering free admission to the entire Wildcat community

Marketing Dec 25, 2020

Suppose I'm a member of the Arizona Student Government, and I propose that we turn the quad into a water slide park, offering free admission to the entire Wildcat community. Before making this proposal, I poll Arizona students and find that 90% of them would gladly use the waterpark. Is the current failure of the market to supply free water slides to Arizona students an example of market failure? Why or why not?

Expert Solution

Answer: No

The only thing you poll showed is that people are willing to use a water slide at a price of $0. It does not say that the benefits of having the slide exceed the costs which are the costs of building and staffing/maintaining the slide along with the lost space that could be used for something else. If the market thought the quad would best be used for a slide, then some investor would have offered to pay for it and charge a positive price.

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