Estimated annual benefit of the tunnel

Assignment Help Business Economics
Reference no: EM131699504

A new publicly financed tunnel under the Brisbane River is expected to reduce the cost of auto travel between two suburbs on either side of the river. The local government is considering the introduction of a $3 tunnel toll. The cost reduction to motorists consists of a reduction in travel time, auto depreciation and petrol expenses totalling $7.00 per trip. Before the tunnel was built there were 3 million trips per year between the two areas. Once the tunnel is in operation it is estimated that there will be 5.5 million trips per year between the two areas.

(i) In terms of areas under the demand curve based on the information given, what is the estimated annual benefit of the tunnel:

  1. (a) to motorists?
  2. (b) to the local government? 

(ii) List two other costs and/or benefits that should be included in a CBA of the tunnel project?

(iii) In 2 to 3 lines explain why the 'before vs. after' assumption in this case could give a misleading estimate of the project's benefits.

Reference no: EM131699504

Questions Cloud

Eventual return to the original? price : Which of the following provides an alternative explanation for the rising price of margarine and its eventual return to the original? price?
Write a paper detailing two different strategies : Write a paper detailing 2 different strategies that Netflix is using to customize it's offering for different countries.
Compute the load for a southern pine column : Using the NDS provisions, calculate the allowable axial compressive load for a southern pine column having a full nominal size of 12 in. by 12 in.
Familiarize yourself with and listen to the latest latino : Familiarize yourself with and listen to the latest Latino, Hip Hop, or pop-music that from the culture you are studying
Estimated annual benefit of the tunnel : (i) In terms of areas under the demand curve based on the information given, what is the estimated annual benefit of the tunnel:
What is smartcom target cost for the chip : SmartCOM, Inc. manufactures a chip that can turn a cellphone into a wireless access point. What is SmartCOM's target cost for the chip
A description of the product or service being offered : Al's Cookie Company is an online ordering site that allows you to purchase one of a kind cookies to be delivered to your home.
Determine your general purpose to inform or entertain : Determine your general purpose: to inform, persuade, or entertain. Provide one brief opinion, impression, or fact you found interesting.
University scholarship fund a percentage : Oklahoma State Univ. requires vendors to pay to the university scholarship fund a percentage of their overall sales.

Reviews

Write a Review

Business Economics Questions & Answers

  About the production function

The production function Q = 0.25X0.5 Y0.5 exhibits: a. constant returns to scale. b. increasing returns to scale. c. increasing and then diminishing returns to scale. d. diminishing returns to scale. 11. When PX = $60, MPX = 2 and MPY = 2, relative e..

  New way of producing electricity that emits fewer pollutants

The first principle of economics discussed in Chapter 1 is that people face trade-offs. Use a production possibilities frontier to illustrate society’s trade-off between two “goods”—a clean environment and the quantity of industrial output. What do y..

  Disruptions in computer systems

1. Cyber-attacks could affect our business. 2. Disruptions in our computer systems could adversely impact our business. 3. We could be liable if third party equipment recommended and installed by us, i.e. smart home controllers, fails to provide ad..

  Do you feel that the federal reserve bank is necessary

Do you feel that the Federal Reserve Bank is necessary? Do you feel that it is currently doing its job? What are some improvements you can propose? Why is the Federal Open Market Committee (FOMC) the key policy group within the Fed? What is the money..

  Injured in an automobile accident

Joey, injured in an automobile accident, won a judgment that provides him $1,500 at the end of each 6-month period over the next 6 years.

  What is the chefs cost function for shrimp balls

Consider a shrimp restaurant at Fisherman’s Wharf in San Fransisco. The chef at the restaurant chooses whether to use farm-raised or wild-caught shrimp to produce the main dish – shrimp balls. Suppose the rent for the restaurant is $2,500. What is th..

  Labor supply and labor demand

Illustrate the solution graphically using Labor Supply / Labor Demand and Production Function diagrams.

  Policy related to the government expenditure and taxes

Policy related to the government expenditure and taxes is called---- and the policy related to money supply and interest is called---- whose recent attempt is mainly focused for----

  Government initiates an economic stimulus package

Assume that the government initiates an economic stimulus package to help the sluggish U.S. economy. Further assume that, among other things, this package includes a one-time payment of $500 to retirees and Social Security recipients. State reason(s)..

  Producer surplus is shown graphically as the area

Suppose that Michelle buys a cappuccino from Paul\'s Cafe and Bakery for $6.25. Michelle was willing to pay up to $8.75 for the cappuccino and Paul\'s Cafe and Bakery was willing to accept $2.25 for the cappuccino. Producer surplus is the difference ..

  What is the socially optimal level of drugs bought and sold

Suppose Merck is developing new drugs that have positive externalities; the positive externality is a pharmaceutical technology we all benefit from. Let the supply curve for Merck’s production be P =Q/4, where Q is the number of units of drugs they’v..

  Intermediate good is good

Intermediate good is a good. produced in a previous year the GDP does not include intermediate goods even if they are sold during the current year. produced in a previous year the GDP includes intermediate goods only if they are sold during the curre..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd