Consider a small suburb with just eight residents, who each commute once per day to the central business district. The cost of a trip (T) on the freeway with capacity is such that:

The alternative commuting cost for each of the individual is not subject to congestion and is listed below:

	Alt.
Person	Cost
Adam	36
Brigit	34
Cheryl	32
David	30
Emily	28
Frank	26
Gail	24
Henry	22

a. Using the above information to compute AC for T = 0,1, 2, 3, . . .8.

Next, compute total cost from use of the freeway for each traffic level. Total cost is just T times AC. Finally, compute marginal (social) cost (MC), which equals the change in total cost from adding a person to the freeway.

T

0

1

2

3

4

5

6

7

8

b. Find the equilibrium level of T. Explain.

c. Find the socially optimal level of T. Explain.

Consider a small suburb with just eight residents, who each commute once per day to the central business district. The cost of a trip (1) on the freeway with capacity T = 5 is such that: ACprivate = {- 3+127) ifT>T The alternative commuting cost for each of the individual is not subject to congestion and is listed below: Alt. Person Cost 36 34 Adam Brigit Cheryl David 32 30 28 Emily Frank Gail 26 24 22 Henry a. Using the above information to compute AC for T = 0,1,2,3,...8. Next, compute total cost from use of the freeway for each traffic level. Total cost is just T times AC. Finally, compute marginal (social) cost (MC), which equals the change in total cost from adding a person to the freeway. a. Using the above information to compute AC for T = 0,1, 2, 3,...8. Next, compute total cost from use of the freeway for each traffic level. Total cost is just 7 times AC. Finally, compute marginal (social) cost (MC), which equals the change in total cost from adding a person to the freeway. T 0 1 2 3 4 5 6 7 8 b. Find the equilibrium level of T. Explain. c. Find the socially optimal level of T. Explain. Consider a small suburb with just eight residents, who each commute once per day to the central business district. The cost of a trip (1) on the freeway with capacity T = 5 is such that: ACprivate = {- 3+127) ifT>T The alternative commuting cost for each of the individual is not subject to congestion and is listed below: Alt. Person Cost 36 34 Adam Brigit Cheryl David 32 30 28 Emily Frank Gail 26 24 22 Henry a. Using the above information to compute AC for T = 0,1,2,3,...8. Next, compute total cost from use of the freeway for each traffic level. Total cost is just T times AC. Finally, compute marginal (social) cost (MC), which equals the change in total cost from adding a person to the freeway. a. Using the above information to compute AC for T = 0,1, 2, 3,...8. Next, compute total cost from use of the freeway for each traffic level. Total cost is just 7 times AC. Finally, compute marginal (social) cost (MC), which equals the change in total cost from adding a person to the freeway. T 0 1 2 3 4 5 6 7 8 b. Find the equilibrium level of T. Explain. c. Find the socially optimal level of T. Explain