Order the answer to: Numerical problem on consumer surplus:…
|Question||Numerical problem on consumer surplus: Assume that the demand for travel over a bridge takes the form Y= 1,000,000 – 50,000P, where Yis the number of trips over the bridge and Pis the bridge toll (in dollars).
a. Calculate the consumer surplus if the bridge toll is $0, $1, and $20.
b. Assume that the cost of the bridge is $1,800,000. Calculate the toll at which the bridge owner breaks even. What is the consumer surplus at the breakeven toll?
c. Assume that the cost of the bridge is $8 million. Explain why the bridge should be built even though there is no toll that will cover the cost.
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