After Many Years, a Small Community Decides to Build a Toll

question 175

Multiple Choice

After many years, a small community decides to build a toll road but then discovers it is little used.If it wishes the road to be used at the socially optimal level, the community should:

• A)set the toll higher.
• B)set the toll equal to $1.
• C)set the toll equal to zero.
• D)build another toll road.

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Definitions:

Human Capital

The economic value of a worker's experience and skills, including factors like education and training.

Compensating Differentials

Wage differentials that compensate workers for job attributes, such as unpleasant conditions or risks, maintaining equilibrium across labor markets.

Wage Disparity

Wage disparity refers to the differences in wages earned by different groups of people, often influenced by factors such as gender, ethnicity, education, and job type.

Compensating Differentials

Wage differences across jobs that reflect the desirability of the job attributes, compensating workers for non-monetary aspects of different jobs like risk or undesirable hours.