Gce Model Questions Vol1 2019 Economics Question 47
Practice objective / multiple choice question 47 from the 2019 Gce Model Questions Vol1 Economics examination.
The marginal private cost of using a road is \(C_p(q)=2+0.5q\) (dollars per vehicle), where \(q\) is the number of thousand vehicles per hour. The marginal external cost of congestion is \(C_e(q)=0.3q\). The demand (willingness to pay) is given by \(P(q)=10-q\). Determine (a) the socially optimal traffic level \(q^{*}\) (in thousand vehicles per hour) and (b) the uniform per‑vehicle toll that would induce this optimal level. Give your answers rounded to two decimal places.
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About This Question
This is Gce Model Questions Vol1 2019 Economics Question 47. It is one of the objective questions from the 2019 Gce Model Questions Vol1 Economics examination.
Difficulty level: Hard .
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