Suppose you are in charge of a toll bridge that costs essentially nothing to operate. The demand for bridge crossings Q...
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 – 0.5Q. Initially you charge a toll at $7. Now you reduce the toll to $6. How much consumer surplus can the consumers of the bridge gain from this reduction?
Homework Answers
Initial CS=AED
AED=(15-7)*16/2
AED=64
CS after fall in price.
New CS=ABC
ABC=(15-6)*18/2
ABC=81
Gain in CS=81-64=17
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