What is the change in their consumer surplus

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Consider the market for parking spaces in a campus. Suppose there are two types of demanders: faculty (F) and students (S). The faculty's inverse demand curve for parking spots is: p = 300 - 5qF . Students' inverse demand for parking is p = 300 - 15qS where p is the price of a parking space, qF is the quantity of parking spaces purchased by faculty and qS is the quantity purchased by students.

(a) Convert the faculty and students' inverse demand curves into "standard demand" curves that state the quantity of spaces demanded by each group at any given price.

(b) If we define faculty and students the total market for parking places, what is the market demand for parking on campus? Plot the faculty's demand, students' demand, and the market demand curve. (Hint: it may be easier to use inverse demand when you are ready to plot the curves).

(c) Suppose that the price of a parking spot for a day is initially p0 = $15. How many spaces do faculty and students each demand? What is the faculty's consumer surplus?

(d) Due to increased maintenance costs, the price is raised to p1 = $20. Now how many spaces do the faculty demand? What is the change in their consumer surplus?

Reference no: EM132368910

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