Final Exam | ECON 346 - Economics of Outdoor Recreation, Quizzes of Economics

Download Final Exam | ECON 346 - Economics of Outdoor Recreation and more Quizzes Economics in PDF only on Docsity! TERM 1 What are the four roles of pricing recreation? DEFINITION 1 Four roles of pricing recreation: 1) Financial revenue 2) Ensures maximum benefit to users 3) Equity and fairness (good benefits received, user pay) 4) Management tool (pricing to shift use/ from peak to off peak, from crowded to uncrowded) TERM 2 The key property that a recreation demand curve must exhibit for raising the entrance fee to increase an agency's total revenue. DEFINITION 2 The demand curve must be price inelastic. (For example, if on the y axis you increase the price from $4.00 to $6.00, because the demand curve is inelastic, on the x axis, the revenue will only travel from $2500.00 to $2000.00 and you do not loose that much in demand.) TERM 3 The most appropriate non-market valuation technique to determine what is the optimum social carrying capacity. DEFINITION 3 The C.V.M. or the Contingent Valuation Method. TERM 4 Two possible study designs used for estimating the benefits of reducing congestion. DEFINITION 4 Two possibilities: 1) Find the WTP (willingness to pay) on days with less crowding and more crowding, a natural experiment 2) Ask hypothetical scenarios of each person at different levels of crowding TERM 5 How does peak load/marginal cost pricing differ from current agency pricing? DEFINITION 5 Peak load/marginal cost pricing are more adjustable versus fixed. TERM 6 How might peak load pricing be more equitable for low income recreation users? DEFINITION 6 Because the peak load pricing is adjustable, during off-peak durations prices are modified and priced lower so low-income users can at least afford to visit these periods rather than being permanently restricted by a fixed price. TERM 7 How was differential pricing of campgrounds by Vermont State Parks used as a management tool? DEFINITION 7 As a management tool differential pricing was used in different areas/sites to: reduce congestion, shift the demand curve, and maximize revenue. TERM 8 Evaluate. "Using the T.C.M we add up what the visitor spends on gasoline, lodging and equipment for the dollar value of recreati DEFINITION 8 This calculation is done from a national accounting stance, one where they only calculate the dollar cost of every product or service used with no exogenous variables taken into account like the T.C.M. would calculate. For example it would consider the equipment a durable good and the quantity of its use or take into account possible leakages. This model would create a demand curve to show WTP for recreation use. TERM 9 Why is it necessary to discount future benefits and costs with performing a benefit- cost analysis? DEFINITION 9 Time-preference and opportunity cost is why we discount. Benefits occur in the long-run or overtime while costs occur up front. TERM 10 Define Net Present Value and Benefit-Cost Ratio. DEFINITION 10 NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account. Benefit-cost ratio is a calculation in which the benefits of a project are divided by its costs.