Econ 450SP15 Assignment 3 Answers - Econ450SP15 Assignment#3 Name_Answers Suppose the government decides to charge congestion tolls on a 15 kilometer(km

# Econ 450SP15 Assignment 3 Answers - Econ450SP15...

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Econ450SP15 Assignment #3 Name__Answers_______ Suppose the government decides to charge congestion tolls on a 15 kilometer (km) stretch of expressway through Toronto. A study finds that the cost of time (say the wage rate) for the average driver is \$16 an hour regardless of the time of day. Traffic moves at 100 km/h along this stretch during off-peak hours. The MWTP schedule (the WTP of the last driver) to use the road during off-peak hours is 13 5 15 O MWTP N where N is the volume of traffic (in hundreds of drivers). At N=6, (600 drivers) the road becomes congested, and traffic flows at a speed 600 100 / S km h N when N>6. For example, when the volume of traffic is 1000 drivers (N=10), traffic flows at only 60 km/h. The MWTP schedule to use the road during peak hours is 4 12 5 P MWTP N . 1) What is the time cost to an individual driver for using this stretch of road during off-peak hours?_ \$2.40 ____ (\$16*15/100) ___________________________.

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• Winter '08
• Staff
• Supply And Demand, market supply curve, DWL, MWTP, market equilibrium quantity, time cost

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