Question: Numerical problem on consumer surplus: Assume that the demand for travel over a bridge takes the form Y= 1,000,000 - 50,000P, where Yis the number

Numerical problem on consumer surplus: Assume that the demand for travel over a bridge takes the form Y= 1,000,000 - 50,000P, where Yis the number of trips over the bridge and Pis 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.

Step by Step Solution

★★★★★

3.64 Rating (180 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a At P 0 CS 10 million at P 1 CS 9025 million at P 20 CS 0 b ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

673-B-E-M-E (4090).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Consider a monopolist who sells batteries. Each battery works for h hours and then needs to be replaced. Therefore, if a consumer buys q batteries, he gets H = qh hours of operation. Assume that the...

A cotton grower in south Georgia produces cotton on farms in Statesboro and Brooklet, ships it to cotton gins in Claxton and Millen, where it is processed, and then sends it to distribution centers...

Assume that the demand for gasoline is inelastic and supply is relatively elastic. The government imposes a sales tax on gasoline. The tax revenue is used to fund research into clean fuel...

Numerical problem on consumer surplus: Assume that the demand for travel over a bridge takes the form Y = 1 , 0 0 0 , 0 0 0 5 0 , 0 0 0 P , where Y is the number of trips over the bridge and P is the...

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...

Q no 2: 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...

Assume that the demand for travel over a bridge takes the form Y = 1 , 0 0 0 , 0 0 0 5 0 , 0 0 0 P , where Y is the number of trips over the bridge and P is the bridge toll ( in dollars ) . Calculate...

Demand and Supply Discussion Question: Applications-Ubereconomics Please read the article below and respond to the follow-up question: Why Uber Is an Economist's Dream Does 'surge pricing'...

A curve for which y" = x passes through the point (1, -1) with a slope of. Find the value of constant of integration C2. 2 . 19 B. - 8. 13 D. - . - 6. 3 6

Namibia Wood Products ("NWP") is a company that manufacturers different types of furniture products under a job costing environment. To ensure that the company meets its customer expectations and the...

3. LO 1 Assume an economy where consumers buy all goods from an online store that allows trading irms to sell goods and consumers to sell secondhand goods. All sellers pay 30% of their sales to the...

Explain how the federal government avoids taxing company profits twice.

You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 7 percent, -12 percent, 11 percent, 38 percent, and 14 percent. Required: a. The arithmetic average...

General requirement is to solve by hand and try to solve without using a compiler. Exercise dynamic memory allocation 1.) Consider you want to dynamically allocate memory for an array of arrays,...

Jerri has $ 5 0 , 0 0 0 in taxable income this year. She has not yet used any expensing. How much could she lower her taxable income if she could take full advantage of expensing?