A state is considering building a new highway. Astrid lives and works near the site of the new highway. She makes 10 trips each week between towns A and B when one trip costs her $5. If the new highway were built, it would reduce Astrid's cost of each such trip from $5 to $4.

A state legislator looks at Astrid's data and believes that the maximum amount that she would be willing to pay to support the new highway is $10 per week. He determines the $10 by multiplying Astrid's 10 trips per week by the saving per trip of $1.

a) Do you agree with the legislator's reasoning? If not, what changes would you make in their argument? b) Support your answer by graphing Astrid's demand curve for trips between towns A and B.

c) Under what price elasticity of Astrid's demand would the legislator's reasoning make sense?