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There are 15 doctors living at the mid-level of a hill. The hospital is located at the foot of the hill. Every morning, each doctor
There are 15 doctors living at the mid-level of a hill. The hospital is located at the foot of the hill. Every morning, each doctor can either drive or use free tram service down the hill to go to work. As there is only a small road down the hill, traffic congestion may occur if many doctors choose to drive. If n doctors choose to drive, it will take each doctor 2n + 4 minutes to drive down the hill (n can only take integer values). On the other hand, it always takes 12 minutes to get down by tram. Assume that all doctors have the same opportunity cost of time ($20 per minute); and, other than driving time, all driving related cost are negligible. - If the doctors make their decisions individually, we would expect [ Answer1 ] doctors will drive in equilibrium. - From the society's perspective, we should have [ Answer2 ] doctors driving. - If the government charges a $60 toll for the road, and the doctors make their decisions individually, we would expect [ Answer3 ] doctors will drive in equilibrium. - Suppose any policy (such as the toll collection) to regulate the road usage is feasible only with an implementation cost of $C per day. At its best, the government can in fact set a toll to achieve the socially optimal number of doctors driving. From the society's perspective, such policy should be implemented only if C is less than [ Answer4 ]
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