Question

Suppose the demand for park visits is Q = 10,000 −100P. Based on the given equation, please answer the following two questions.

(a) If park visits are free, how many visitors will attend?

(b) How will your answer change if the park adds a $20.00 admission fee?

Answer 1

We have been given the demand equation as a funcion of price.

Q = 10,000 - 100P

a) If park visits are free, it means that there will be no price charged from visitirs. So putting P=0 in demand equation,

Q = 10,000 - 100(0)

Q = 10,000

So, 10,000 visitors will attend if park visits are free.

b) If there is admission fee charged to visit the park, then there will be reduction in demand. Putting P=20 in equation,

Q = 10,000 - 100(20)

Q = 10,000 - 2,000

Q = 8,000

So, 8,000 visitors will attend if there is admission fee of $20 on park visits. Demand falls by 2,000 visitors as price rises.