6)Seogang university management accounting14

6)Seogang university management accounting14 - Urban...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Urban Economics: Economics 4621 University of Minnesota, Spring 2004 N11: Notes on Congestion MODEL WITH FIXED CAPACITY Suppose that there is a highway that connects the suburbs to the downtown. Let Q denote the number of drivers on this road. The time cost per driver A ( Q ) (the average time cost) depends upon the number of drivers. Assume A ( Q ) = 0 for Q X (where X is referred to as capacity) and A ( Q ) > for Q > X . T h i s captures the idea that when there are few cars on the road, the addition of another car makes no difference for congestion. But after a certain point, addition of cars begins to congest the highway and commute times goes up. Total time cost is T ( Q ) = A ( Q ) Q. and marginal time cost is M ( Q ) = T ( Q ) = A ( Q ) + A ( Q ) Q . The marginal time cost equals the average time cost plus the change in average cost multiplied by the number of drivers. Let D ( Q ) be note the inverse demand for driving when prices are denoted in units of time. This is the marginal willingness to pay (in time) for theof time....
View Full Document

Page1 / 4

6)Seogang university management accounting14 - Urban...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online