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Assume that the demand for travel over a bridge takes the form Y _ 1,000,000 _ 50,000P, where Y is the number of trips over the bridge and P is the...
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Question

Assume that the demand for travel over a bridge takes the form Y _

1,000,000 _ 50,000P, where Y is the number of trips over the bridge and P is the bridge toll (in dollars). a Calculate the consumer surplus if the bridge toll is$0, $1, and $20. b. Assume that the cost of the bridge is $1,800,000.Calculate the toll at which the bridge owner breaks even. What is the consumer surplus at the breakeven toll? c. Assume that the cost of the bridge is $8 million. Explain why the bridge should be built even though there is no toll that will cover the cost.

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Subject: Business, Economics

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