The Town of Smallhaven Is on a Small Island Connected

question 164

Multiple Choice

The town of Smallhaven is on a small island connected to Large City by a single bridge. Most of the residents of Smallhaven work in Large City. As a result, the bridge becomes very congested for two hours each day at the typical morning and evening commute times. Which of the following policies considered by the mayor of Smallhaven would likely be most efficient in alleviating the congestion?

• A)A fixed toll for the bridge payable by every vehicle crossing the bridge at all days and times.
• B)A variable toll for the bridge payable only by vehicles crossing the bridge during the congested commute times.
• C)Any vehicle crossing the bridge at any time must have a sticker paid for with a one-time fee of $25.
• D)A press conference in which the mayor requests that people try to cross the bridge earlier or later than the typical commute times.

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Definitions:

Income Redistribution

The reallocation of income from certain individuals to others by means of a social mechanism such as taxation, charity, welfare, public services, land reforms, or monetary policies.

Utilitarian Justice

The idea that “a dollar in the hand of a rich person is worth less than a dollar in the hand of a poor person.” If the marginal utility of income declines with income, transferring income from the rich to the poor will increase total utility.

Human Capital

The economic value of a worker's experience and skills, including education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.

Utilitarian Justice

A principle in ethics and economics that a decision should be made so as to maximize overall happiness and reduce suffering among all people affected by the decision.