The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne

Exercise 3

The city of Seattle owns a marina and rents space to boat owners. When city officials decided to set rental rates that would yield a 5 percent profit on the estimated cost of replacing the facility, they said this would call for an approximate doubling of mooring fees over the next three years.
(a) What does the estimated cost of replacing the facility have to do with the cost of renting out mooring space?
(b) The most important part of the facility is the ocean water that fills Puget Sound, on which the marina was constructed. Should the estimated cost of replacing the ocean be included in the price? (If you argue that it should not be included because the ocean is a free gift of nature, go back and check your answer to question 9 at the end of Chapter 4.)
(c) At the time they announced their intention to raise the fees, city officials estimated the waiting time for a space at 17 to 20 years. What does this have to do with the cost of renting out mooring space?