Microeconomics
Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 5, Problem 11IP
To determine

Impact of charging insurance from per car per year to tax on gas.

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5. An article in the Financial Times noted that toll road that connects two counties in Massachusetts was not generating as much toll revenue as predicted. At that time, the toll rate was $8 for a passenger car making a round trip from end to end on the tollway during rush hour. What type of additional information would you need to know in order to determine if the toll should be increased or decreased to maximize revenue?
Jenny is going to rent a truck for one day. There are two companies she can choose from, and they have the following prices. Company A charges $90 and allows unlimited mileage. Company B has an initial fee of $55 and charges an additional $0.70 for every mile driven.
One rationale for imposing taxes on alcohol consumption is that people who drink alcohol impose negative spillovers on the rest of society—for example, through loud and unruly behaviour or intoxicated driving. If this rationale is correct, in the absence of governmental taxation, will people tend to consume too much, too little, or the right amount of alcohol?
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