There is a road between the suburbs and downtown. The road is congested at rush hour. If 172 people use the road at rush hour, the trip takes 38 minutes. If one additional person enters the road, everyone has to slow down and the trip now takes 39 minutes. People value their time at $6 per hour (that is, 50.10 per minute). For simplicity, ignore all of the costs of using the road other than the cost of time. The total social cost of 172 people using the road at rush hour is S (Round your response to the nearest dollar.) The marginal social cost of onea additional person is S (Round your response to the nearest dollar.) The efficient toll on this one additional person (that is, the cost he imposes on other drivers) is S (Round your response to the nearest dollar.) Suppose at noon 50 people are using the road. The road is not congested and the trip takes just 20 minutes. If one additional driver enters the road, no one has to slow down and the trip continues to take 20 minutes. The toll at noon should be S (Round your response to the nearest dollar.)

There is a road between the suburbs and downtown. The road is congested at rush hour. If 172 people use the road at rush hour, the trip takes 38 minutes. If one additional person enters the road, everyone has to slow down and the trip now takes 39 minutes. People value their time at $6 per hour (that is, 50.10 per minute). For simplicity, ignore all of the costs of using the road other than the cost of time. The total social cost of 172 people using the road at rush hour is S (Round your response to the nearest dollar.) The marginal social cost of onea additional person is S (Round your response to the nearest dollar.) The efficient toll on this one additional person (that is, the cost he imposes on other drivers) is S (Round your response to the nearest dollar.) Suppose at noon 50 people are using the road. The road is not congested and the trip takes just 20 minutes. If one additional driver enters the road, no one has to slow down and the trip continues to take 20 minutes. The toll at noon should be S (Round your response to the nearest dollar.)

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter21: Getting Employees To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 21.2IP

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