Question 6 A section of a highway has the following characteristics: ? V = 60- 120 where is the speed (mph) anis the stream flow (veh/hr). Further, ? = 2.5 3 +- 200 where is the motorists' cost (cents/mile) and 104 D = 3.8 X 7 where is the demand (vehicles/hour). (a)Plot the motorist and marginal cost curves and the demand curve. (b) Determine the optimum flow. (c)Determine the toll that should be charged to limit the flow to the optimal flow. Solutions a). p= 7.5+ 500 = AC 60 9 120 TC = pq =7.5q+ 6x 10q 7200-q MC = dTC 7.5- 4.32x 108 dq 7200-q) Inverse demand curve: 3.8x 10 /q b). 7.5+. 4.32x 103 3.8x 104 = q" =1732veh/ hr (7200-q)