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How many people would cross the bridge

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Reference no: EM131095186

Suppose you are in charge of a toll bridge that is essentially cost free. The inverse demand for bridge crossings Q is given by P = 20 - Q/3 , where P designates the potential toll fee.

  1. How many people would cross the bridge if there was no fee. 
  2. What is the loss of consumer surplus associated with the charge of a bridge toll $5? 
  3. As the toll bridge operator you're debating raising the toll to $6. At this higher price, would the toll revenues increase or decrease? What does your answer tell you about the elasticity of demand?

Reference no: EM131095186

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