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ASSIGNMENT 8, continued 5. (1) $13.13 What is Carla's trip cost if there are 2,000 cars on the road per hour? (2) $9.79 (3) $6.46 (4) $4.00 6. The demand for the road during peak period travel, when there are over 1,500 cars per hour on the road. is V - 5,600 - 400p. Assuming that other drivers have the same costs and value of travel time as Carla, what is the equilibrium traffic volume on the road that Carla drives on to get to work? (1) 1,500 (2) 1,549 (3) 1.679 (4) 1,600 7. What should the congestion toll be to make more efficient use of the road capacity during peak periods? (1) The toll should be equal to the external cost of travel at the efficient traffic volume. (2) The toll should be equal to the total cost minus the private cost at the efficient traffic volume. (3) The toll should equal the amount that makes drivers take the total cost of their decisions into account. (4) All of the above statements are true. THE NEXT TWO (2) QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION: You are about to purchase a house in the city of Beryperty, a small open city, You have narrowed your options to two properties, one in the central city and one near the boundary of the urban area. The properties are identical in all other respects. Since everyone in Beryperty is identical, and the markets there are perfectly competitive, you would be indifferent among the houses if you did not possess an important piece of private information. You know that at its next meeting, the city council will unexpectedly impose congestion tolls on auto commuting the only form of travel in the city. (For guidance refer to Figure 9.12 and the corresponding explanation. Note that the higher graph displays short-run effects and the lower graph displays long-run effects.) 8. What are the short-run effects of the unexpected implementation of congestion tolls on auto commuters? (1) In the short run, the housing price function will shift in and up, making houses near the city centre more expensive and making the size of the city smaller. (2) In the short run, the housing price function will shift out and down, making houses near the city centre less expensive and making the size of the city larger. (3) In the short run, the housing price function will become steeper and house prices at all locations will increase. (4) In the short run, the housing price function will become flatter and house prices at all locations will decrease. Assignment continues on the following page