How the analyst could use the data to predict gross benefits

Reference no: EM13185900

An analyst was asked to predict the gross social benefits of building a public swimming pool in Dryville, which has a population of 70,230 people and a median household income of $31,500. The analyst identified 30 towns in the region that already had public swimming pools. She 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, she was able to find each town's population (POP) and median household income (INCOME) in the most recent census. Her data can be found on D2L, where the file name is DATA_FOR_PS4_FA13.xls.

a. Show how the analyst could use these data to predict the gross benefits of opening a public swimming pool in Dryville and allowing free admission.

b. Predict gross benefits if admission is set at $1.00 and Dryville has marginal excess tax burden of 0.25. In answering this question, assume that the fees are used to reduce taxes that would otherwise have to be collected from the citizens of Dryville to pay for expenses incurred in operating the pool.

Reference no: EM13185900

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