Reference no: EM133636872

Assignment:

The Forest Service would like to know whether they should set aside some National Forest land, previously slated to be logged, for hiking. You are helping do a travel-cost analysis to estimate the benefits of the set-aside. Survey data has been gathered from 1500 hikers who visited a forest in a neighboring state. Using a statistical technique called regression analysis, you have controlled for differences in income, employment status, age and other important factors that might affect the number of hiking trips taken. Taking these factors into account, you have developed the following relationship

Based on demographic information about the people living in the vicinity of the proposed park, you have estimated that 20,000 people will take an average of 8 hiking trips per year.

For the average person, calculate:

1) the consumer surplus for a single visit to the new park by a visitor with travel costs of $20

2) the total consumer surplus for an average visitor

3) the total expected consumer surplus per year from the proposed park

4) the total expected consumer surplus if the number of visitors changes to 30,000 and an average visitor takes 12 trips.