Gross benefit of opening a public swimming pool

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A. An analyst was asked to predict the gross social benefits of building a public swimming pool in LGA, which has a population of 80,000 people and a median household income of $42,500. The analyst identified 24 towns in the region that already had public swimming pools. They conducted a telephone interview with the recreation department in each town to find out what fee it charged per visit (FEE) and how many visits it had during the most recent summer season (VISITS). In addition, they were able to find each town's population (POP) and median household income (INCOME) in the most recent census. Based on the obtained data they were able to identify the following relationship

VISITS = 140000 - 14638*FEE -0.001129*INCOME + 0.7551*POP

i. What is the gross benefit of opening a public swimming pool in LGA and allowing free admission?

ii. Estimate the loss in gross benefits if admission fee is set at $2.00.

B. Why do we need to consider shadow price during CBA?

Reference no: EM133081966

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