Why Should the Management of a Tunnel Charge a Toll

question 2

Essay

Why should the management of a tunnel charge a toll to users?

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Definitions:

Externality

A consequence of an economic activity experienced by unrelated third parties; it can be positive or negative.

Sunk Cost

Expenses that have already been incurred and cannot be recovered, and should not influence future business decisions.

Operating Cash Flow

The cash generated by a company's normal business operations, indicating whether a company can maintain or grow its operations without external financing.

Capital Cost Allowance

A tax deduction in some jurisdictions that allows businesses to depreciate the cost of tangible and intangible assets over time.