The city of A is considering whether to build a new public swimming pool. The pool would have a capacity of 800 swimmers per day and the proposed admission fee is $6 per person per day. The estimated cost, averaged over the expected lifetime of the pool, is $4 per person per day.
The city has hired you to assess the project. Fortunately, the nearby town of B (a town similar to A) already has a pool and you have the results of a study conducted by B town that shows how quantity demanded varies with the admission price. That information is listed below.
Admissions Price Number of Swimmers per day
2 1400
4 1100
6 800
8 500
10 200
A. Draw a graph that shows the demand schedule, the proposed price and the anticipated quantity demanded.
B. Calculate the anticipated total revenue, total cost, and profit.
C. Calculate the anticipated consumer surplus