1. The table below describes traffic on a congestible freeway. Plot and label the marginal social cost (MC), average private cost (AC), and demand (D) curves on the provided graph paper. T refers to the number of cars on the freeway. 2. What is the equilibrium level of traffic? _________ Label it T_eq on the chart. 3. What is the socially optimal level of traffic? _________ Label it T_opt on the chart. 4. At what level of traffic does congestion appear? _________ Label it T_bar on the chart. 5. What toll would reduce traffic from the equilibrium to the social optimum? __________ T MC AC D - 3.00$ 3.00$ 6.50$ 1 3.00$ 3.00$ 6.40$ 2 3.00$ 3.00$ 6.30$ 3 3.00$ 3.00$ 6.20$ 4 3.00$ 3.00$ 6.10$ 5 3.00$ 3.00$ 6.00$ 6 3.20$ 3.10$ 5.90$ 7 3.40$ 3.20$ 5.80$ 8 3.60$ 3.30$ 5.70$ 9 3.80$ 3.40$ 5.60$ 10 4.00$ 3.50$ 5.50$ 11 4.20$ 3.60$ 5.40$ 12 4.40$ 3.70$ 5.30$ 13 4.60$ 3.80$ 5.20$ 14 4.80$ 3.90$ 5.10$ 15 5.00$ 4.00$ 5.00$ 16 5.20$ 4.10$ 4.90$ 17 5.40$ 4.20$ 4.80$ 18 5.60$ 4.30$ 4.70$ 19 5.80$ 4.40$ 4.60$ 20 6.00$ 4.50$ 4.50$ 21 6.20$ 4.60$ 4.40$ 22 6.40$ 4.70$ 4.30$ 23 6.60$ 4.80$ 4.20$ 24 6.80$ 4.90$ 4.10$ 25 7.00$ 5.00$ 4.00$

$7.50 $7.25 $7.00 $6.75 $6.50 $6.25 $6.00 $5.75 $5.50 $5.25 $5.00 $4.75 $4.50 $4.25 $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 $- 2 3 4 5 6 8 9 $7.50 $7.25 $7.00 $6.75 $6.50 $6.25 $6.00 $5.75 $5.50 $5.25 $5.00 $4.75 $4.50 $4.25 $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 $- 2 3 4 5 6 8 9