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Suppose the government is considering an increase in the toll on a certain stretch of highway from $3 to $4. At present, 1 million cars
Suppose the government is considering an increase in the toll on a certain stretch of highway from $3 to $4. At present, 1 million cars use that highway stretch each week; after the toll is imposed, the number of cars per week will change according to its price elasticity of demand of -1.2 (this elasticity value is estimated based on the initial-value method ). If the marginal cost of highway use is constant (i.e., the supply curve is horizontal) and equal to $3 per car, what is the net annual cost to society attributable to the increase in the toll? (your answer must be rounded off to the nearest million dollars per year, i.e., no decimal places; there are 52 weeks in a year]
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