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Suppose one were asked to recommend a price for the output of a proposed downtown parking garage, so that the project would have as large a Net Present Value as possible. In this case, the optimal parking price or rate is the one for which the last person's willingness to pay for parking will exactly equal that person's marginal cost of parking, including the opportunity cost of that person's time.
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Describe Willingness to Pay?
Assume that the market equilibrium rent for two-bedroom apartments in Santa Monica, California is $1500 per month and the quantity is 40,000 units. The city council of Santa Monica
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