If Tolls on a Toll Road Can Be Raised Significantly

question 29

Multiple Choice

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, then an increase in tolls will result in

• A)a decrease in total revenue.
• B)a decrease in non-toll road usage.
• C)an increase in total revenue.
• D)an increase in toll road usage.

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Definitions:

Perfect Complements

Goods that are consumed together in fixed proportions to fulfill a specific utility.

Convex Preferences

A set of consumer preferences that exhibit a specific property where mixtures of goods are preferred over singular extremes, displaying a curve outward towards the origin on a utility graph.

Weakly Convex

Describes a curve or set in geometry and mathematical functions that bulges outward less sharply than a perfectly convex shape, often applied in optimization problems.

Convex Preferences

A representation in economics of a consumer preference structure where a mix or combination of two goods is preferred over either of the two goods alone, indicating a desire for diversification.