City A has a travel demand function q = 2.0 x 106 – 5000t, and road performance function 50 + 8 x 10-5q, where t is in minutes. There is a proposal to expand the road such tha %3D the road performance function will become t2 = 30 + 5 x 10-59, with a construction cos of $9.6 x 107.
City A has a travel demand function q = 2.0 x 106 – 5000t, and road performance function 50 + 8 x 10-5q, where t is in minutes. There is a proposal to expand the road such tha %3D the road performance function will become t2 = 30 + 5 x 10-59, with a construction cos of $9.6 x 107.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1: Given that the value of time is $1.5 per minute, justify the proposal.
2: To what value of the construction cost would the proposal become justified?
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