Y6

The transport authority operates a train line into Portland which has a capacity of 8,000 people per hour in each direction. The demand for the line at 9 am is illustrated in the figure. Demand is Q = 12 - P for passengers heading in to the city (where Q is in 000, and P in $) (demand curve A) Demand is Q = 4 - P for passengers leaving the city (demand curve B). Marginal cost is 0 up until capacity.

Question

The transport authority instead has a uniform price of $8 in each direction.

(9) What is total surplus for those leaving the city (demand curve B).

(10) What is total surplus for those entering the city (demand curve A), assuming that rent seeking would be complete.