The government desires to construct a road to ease congestation in that area. it conducted a survey that entailed three groups of individiduals and come up with three demand equations three groups of individuals and came up with three demand equations as given below. Group 1: D1= 20 - 0.2P1 Group 2: D2= 35 - 0.5P2 Group 2: D3 = 40 - 0.8P3 where D is the size of the road and P is the group contribution. If the cost of the cost of constructing the road is 5 billions What is the optimal size of the road to be constructed? Determine each group contribbution. With calculation , explain why the road may not be constructed.

The government desires to construct a road to ease congestation in that area. it conducted a survey that entailed three groups of individiduals and come up with three demand equations three groups of individuals and came up with three demand equations as given below. Group 1: D1= 20 - 0.2P1 Group 2: D2= 35 - 0.5P2 Group 2: D3 = 40 - 0.8P3 where D is the size of the road and P is the group contribution. If the cost of the cost of constructing the road is 5 billions What is the optimal size of the road to be constructed? Determine each group contribbution. With calculation , explain why the road may not be constructed.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.15P

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