Concerning highway pricing and traffic volume in long run

Reference no: EM13693916

Answer the following concerning highway pricing and traffic volume in the long run.

a) Draw the ATC curve for a 4 lane road and explain why it is U shaped in terms of the road cost effect and the trip cost effect.

b) How is the long run optimum traffic volume determined? Draw a graph and label the axes, the curves, and the long run optimum traffic volume.

c) On the same graph from (b) label the congestion tax that is necessary to achieve the long run optimum traffic volume. Label any new curves that need to be put in the graph.

Reference no: EM13693916

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