To encourage bike riding the State decides to completely subsidize the cost of bikes as well as their maintenance.** This subsidy costs the government______ per day and causes the number of trips in equilibrium to increase to_____thousand per day. $ Per TripF53025O Search20151050F60Biking to Work/School MarketDemand (Private MWTP): MWTP = 25-Q/10External marginal benefit per trip = 5Private marginal cost per trip=2.5F750F81008LDQ, Thousand Trips Per Day150F909200F10---250F11hulu0:+300F12PrtScInsert

Externalities: When a firm produces a good sometimes it creates cost or benefits for other firms. If…

Answered: To encourage bike riding the State…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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To encourage bike riding the State decides to completely subsidize the cost of bikes as well as their maintenance.** This subsidy costs the government______ per day and causes the number of trips in equilibrium to increase to_____thousand per day.

$ Per Trip
F5
30
25
O Search
20
15
10
5
0
F6
0
Biking to Work/School Market
Demand (Private MWTP): MWTP = 25-Q/10
External marginal benefit per trip = 5
Private marginal cost per trip=2.5
F7
50
F8
100
8
LD
Q, Thousand Trips Per Day
150
F9
09
200
F10
---
250
F11
hulu
0:+
300
F12
PrtSc
Insert

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