6. Suppose you are in charge of a toll bridge that costs essentially nothing to operate. The demand for bridge crossings Q is given by $P = 15 - \frac{1}{2}Q$. a. Draw the demand curve for bridge crossings. KEY b. How many people would cross the bridge if there were no toll? KEY c. What is the loss of consumer surplus associated with a bridge toll of $5? KEY d. The toll-bridge operator is considering an increase in the toll to $7. At this higher price, how many people would cross the bridge? Would the toll-bridge revenue increase or decrease? What does your answer tell you about the elasticity of demand? KEY e. Find the lost consumer surplus associated with the increase in the price of the toll from $5 to $7. KEY
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To draw the demand curve for bridge crossings, we need to plot the quantity of bridge crossings on the x-axis and the price of the toll on the y-axis. Since the demand equation is given as P=15, we can assume that the quantity demanded decreases as the price Show more…
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Suppose you are in charge of a toll bridge that costs essentially nothing to operate. The demand for bridge crossings $Q$ is given by $P=15-(1 / 2) Q$ a. Draw the demand curve for bridge crossings. b. How many people would cross the bridge if there were no toll? c. What is the loss of consumer surplus associated with a bridge toll of $\$ 5 ?$ d. The toll-bridge operator is considering an increase in the toll to $\$ 7 .$ At this higher price, how many people would cross the bridge? Would the tollbridge revenue increase or decrease? What does your answer tell you about the elasticity of demand? e. Find the lost consumer surplus associated with the increase in the price of the toll from $\$ 5$ to $\$ 7$
A toll bridge is constructed, but for the time being, it is cost-free. If the demand for using it is P = 120 - 2Q, where P is the price in $, and Q is the number of vehicles using the bridge per hour. (a) Sketch the demand curve for bridge crossing. (b) If the crossing is free, how many vehicles are likely to cross the bridge? (c) If a toll of $20 is charged per crossing, how many will use the bridge per hour, and what will be the loss in consumer's surplus?
Andrew D.
The current toll for the use of bridge is $2.50. Drivers use this bridge because of its convenience even though there are other bridges that are free. The provincial government conducts a study that determines that a toll of p dollars means f(p) = 60.00e^(-0.5p) cars will use the bridge. a) Determine if demand is elastic or inelastic at p = $2.50. (6 marks) b) Should the provincial government increase or decrease the toll in order to increase revenue? Give a brief explanation to justify your answer.
Sri K.
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