A new toll road was built in Southern California between San Juan Capistrano and Costa Mesa. On average, drivers save 10 minutes taking this road as opposed to the old road. The toll is $2; the fine for not paying the toll is $76

The probability of catching and fining someone who does not pay the toll is 90%. Individuals who take the road and pay the toll must therefore value 10 minutes at a minimum A) between $1.80 and $68.40.
B) between $2 and $68.40.
C) $1.80.
D) between $1.80 and $76.
E) more than $76.

B

Economics

You might also like to view...

Enacting a law controlling rents near a major university will increase the affordable housing for college students

a. True b. False Indicate whether the statement is true or false

Economics

If the government wanted to ensure that the market reaches the socially optimal equilibrium in the presence of a technology spillover, it should

a. impose a corrective tax on any firm producing a technology spillover. b. offer tax credits to consumers who are adversely affected by the new technology. c. subsidize producers by an amount equal to the value of the technology spillover. d. provide research grants to those firms not currently engaging in research to increase competition in the industry.

Economics