Happyland is the only theme park in the nation. The graph shows its demand curve

Question

Happyland is the only theme park in the nation. The graph shows its demand curve and marginal cost Price and cost (dolars per pass) curve Happyland is regulated to produce the officient output Draw a point at the firm's output and price when it produces the efficient quantity Draw a shape to show the consumer surplus. Label it CS Consumer surplus equals Quantly (passes per day xx Draw only the ojects specied in the question Click the graph, choose a tool in the palette and follow the instructions to create your graph

Explanation / Answer

The efficient quantity will be where P=MC. So in this case the quantity at that point is 700 and the price is $3. This is the efficient combination. The consumer surplus is given by the area between the demand curve and the market price. In this case it is given by the triangle between the marginal cost curve and the demand curve. So here it is CS=1/2*700*7= 2450. This is the consumer surplus between the demand curve and the marginal cost curve.

The break even income should be $40000 here given the tax rate.

Disposable income is post tax and so it will remove some inequality. So the correct answer should be D.

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