Graph the supply and demand for parking spaces

Assignment Help Business Economics

Reference no: EM13774291

A university has a fixed number of parking spaces for students on campus. They are currently sold at a price that clears the market. Suppose there is a proposal that the price should be lowered and a lottery held to determine who may park on campus. Each winner of the lottery would receive a ticket entitling him to purchase a parking space, and these tickets could be freely bought and sold. The number of winners would be equal to the number of parking spaces.

a. Graph the supply and demand for parking spaces. Show on your graph: (1) the marketclearing price of a parking space under the current system (without the lottery), and (2) the price of a ticket under the proposed system.

b. Show the consumers surplus (earned by parkers), the producers surplus (earned by the university), and the total value of the tickets to the winners of the lottery. Who gains, who loses, and who is unaffected if this plan is adopted?

c. An alternative proposal at GMU would institute the lottery without allowing the resale of tickets. The university would carefully monitor compliance, expelling any lottery winner who allowed his parking spot to be used by anybody else. How would this revision affect welfare if the enforcement mechanism were successful? If it were unsuccessful?

Please Explain.

Reference no: EM13774291

Questions Cloud

Imposing trade restrictions on imported steel rods : Suppose there is a policy debate regarding the United States imposing trade restrictions on imported steel rods: The president of the United States argues that the United States should threaten to impose a tariff on Chinese steel rods in order to ind..

The main liability on the federal reserves balance sheet : The main liability on the Federal Reserve's balance sheet is. Third Bank has reserves of $12.3 million and transaction accounts of $115 million. If required reserves are 10 percent of transactions accounts, Third Bank has excess reserves of

Main liability on the federal reserves balance sheet : When the Fed adopts a contractionary monetary policy, the interest rate at which the Fed lends to other banks will be expected to and the money supply in the economy would be expected to. The main liability on the Federal Reserve's balance sheet is. ..

Suppose the government sets an effective price floor : Suppose the government sets an effective price floor (that is, a price above equilibrium) in the market for oranges and agrees to buy all oranges that go unsold at that price. The oranges purchased by the government are discarded.

Graph the supply and demand for parking spaces : A university has a fixed number of parking spaces for students on campus. They are currently sold at a price that clears the market. Suppose there is a proposal that the price should be lowered and a lottery held to determine who may park on campus. ..

Demand and transactions for gadgets and widgets : Suppose that your demand curves for gadgets and widgets are both straight lines but your demand curve for a gadget (DG) is much more elastic than your demand curve for widgets (DW). Draw a graph that illustrates your demand and transactions for gadge..

Absolute purchasing and relative purchasing power parity : Discuss the difference between absolute purchasing power parity and relative purchasing power parity.

Why the long-run aggregate-supply curve is vertical : Why the long-run aggregate-supply curve is vertical. Three theories for why the short-run aggregate-supply curve is upward-sloping.

Can traditional project management tools and techniques real : Project management has been applied, but not originated, software development methods. For instance, the traditional, waterfall method can be traced to Winston Royce in 1970 after which project management tools and techniques were applied. Likewise, ..

User Account

All Pages