Travelers driving through gotham city can use a freeway or, Ask an Expert

Economics

Travelers driving through Gotham city can use a freeway or cross town toll way to get thru the city. The toll way charges $1.00 per car during the morning rush (6-9AM) and the afternoon rush (4-7PM) and the toll is $0.40 at other times. The weekly demand for using the toll rush hour is Q1 = 800-200P1 where the quantity demanded is measured in thousands of cars, and the weekly demand for non rush hour period is Q2 = 2000 -1000P2. Gothams marginal cost of operating the toll way is MC = 0.02 +0.001Q per car.

A. What are the marginal revenue curves associated with the two demand curves?

B. Has the city set the profit maximizing tolls for the crossway toll way? If not .do the current tolls generate too much or too little traffic on the toll way?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91566062

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