2. Problem 2 Brisbane and Johnsonburg are two towns separated by the Wind River. Traffic between them crosses the river by a ferry run by the Johnsonburg Ferry Company, which charges a toll. The two towns are considering building a bridge somewhat upstream from the ferry crossing. There would be no toll on the bridge. Travel time between the towns would be about the same with the bridge as with the ferry, because of the bridge's upstream location. The following information is available concerning the crossing: Ferry crossings per year 60,000 Average cost of providing ferry trip ( / crossing) $1 fare ( / crossing $1.50 Planned bridge toll ( / crossing) $0 Expected bridge crossings per year 90,000 EAC of bridge (/year) $85,000 Note: all data are on an annual basis. The cost of the bridge is given as the equivalent annual cost of capital and operating costs. We assume all bridge costs are independent of use that is, there are no costs that are due to use of the bridge. The average cost per crossing of the ferry including capital cost and operating and maintenance costs. If the bridge were built, what would be the annual benefits to travellers? How much would the owners of the Johnsonburg Ferry Company lose if the bridge were built? What would be the effect on taxpayers if the bridge were built? (Assume Johnsonburg Ferry pays no taxes.) What would be the net social gains or losses if the bridge were build? Take into account the effects on travellers, Johnsonburg Ferry owners, and taxpayers. e. Would the net social gains or losses be improved if there were a toll for crossing the bridge? /a0 o