In the beach entry fee scenario similar to the price ceiling and price floor examples, imposition of a fee will likely lead to a reduction in total consumer surplus as fewer people might visit the beach. The exact amount of the change in consumer surplus would require information about the demand curve for beach visits.
- To understand the impact of a government-imposed entry fee on total consumer surplus, we can draw parallels to the theoretical examples of price ceilings and price floors from the given information.
- Let's focus on the back pain drug and movie ticket scenarios to construct our answer:
- In the case of the back pain drug, at the equilibrium price of $600, the original consumer surplus is T + U.
- When the government imposes a price ceiling of $400, less of the drug gets produced (15,000 units instead of 20,000), likely leading to a reduction in consumer surplus since some consumers who were willing to pay more than $400 are now unable to purchase the drug due to the shortage.
- Transposing this effect onto the beach entry fee scenario, we can infer that by introducing a $2 entry fee, fewer people might visit the beach, reducing the total consumer surplus.
- The exact calculation of the change in consumer surplus would require information on the demand curve for beach visits and how many visits will be deterred by the fee.
- In the case of movie theaters with a price floor set at $12, the consumer surplus transitions from G + H + J to just G, illustrating a loss in consumer surplus.
- Similarly, with the beach entry fee, we can expect consumer surplus to decrease, but without specific data, we cannot quantify it accurately.