Question 1. The daily demand for parking spaces at Hot-Shot University looks lik

Question

Question 1. The daily demand for parking spaces at Hot-Shot University looks like There are 800 parking spaces at H -S U. 1A. The societal surplus is generated by this parking fee policy is___ ? The total loss of economic efficiency of a 'free' first-come first-serve parking policy is__? Explain your answer. 1B. What price should the university charge if it wants to maximize societal economic efficiency? Explain your answer. 1C. What is the overall societal gain for implementing the parking plan in 1B over the plan in 1A? Explain.

Explanation / Answer

A. The societal surplus is generated by this parking fee policy is 1600. The total loss of economic efficiency of a 'free' first-come first-serve parking policy 400

B. The university should charge $5 if it wants to maximize societal economic efficiency

C. The overall societal gain for implementing the parking plan in 1B over the plan in 1A is $900.

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