Answered: Imagine that you run the toll authority…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Imagine that you run the toll authority for a city bridge. You must charge all of your customers the exact same toll. Initially, you have set the price at $2 per trip. The blue line on the following graph shows the weekly demand curve for trips across the city bridge.

On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the total weekly revenue when the toll is $2 on the graph. Notice that when you click on the rectangle, the area is displayed.

An advisor has suggested that if you raise the toll to $3, the toll authority would bring in more revenue. To analyze this, use the green rectangle (triangle symbols) to shade the area representing the total weekly revenue when the toll is $3 on the graph.

When the toll is $2, total revenue is _________ thousand per week, but when the toll is $3, total revenue is_________ thousand per week.

Based on your analysis, you can conclude that your advisor is ________ in suggesting that total revenue would rise if you increase the toll from $2 to $3, because the demand for trips across the bridge for prices between $2 and $3 is __________ .

Imagine that you run the toll authority for a city bridge. You must charge all of your customers the exact same toll. Initially, you have set the price at
$2 per trip. The blue line on the following graph shows the weekly demand curve for trips across the city bridge.
On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the total weekly revenue when the toll is $2 on
the graph. Notice that when you click on the rectangle, the area is displayed.
TOLL (Dollars per vehicle)
10
9
8
2
1
0
0
Demand
1
2
3 4
5
7
QUANTITY (Thousands of vehicles per week)
9
When the toll is $2, total revenue is 5
10
TR at $2
TR at $3
An advisor has suggested that if you raise the toll to $3, the toll authority would bring in more revenue. To analyze this, use the green rectangle
(triangle symbols) to shade the area representing the total weekly revenue when the toll is $3 on the graph.
thousand per week, but when the toll is $3, total revenue is
Based on your analysis, you can conclude that your advisor is
$2 to $3, because the demand for trips across the bridge for prices between $2 and $3 is
thousand per week.
in suggesting that total revenue would rise if you increase the toll from

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions