The Following Data Show the Relationship Between the Number of Drivers

question 31

Multiple Choice

The following data show the relationship between the number of drivers who leave for work at 8 a.m., their average commute time, and their marginal benefit of commuting. $$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Number of Drivers } \\\text { Who Leave at 8 a.m. }\end{array} & \begin{array} { c } \text { Average } \\\text { Camunute Time }\end{array} & \begin{array} { c } \text { Murginal } \\\text { Bemefit }\end{array} \\\hline 100 & 30 \text { minutes } & \$ 10 \\\hline 200 & 65 \text { mirutes } & \$ 8 \\\hline 300 & 110 \text { minutes } & \$ 4 \\\hline 400 & 170 \text { mirutes } & \$ 3 \\\hline 500 & 260 \text { rinutes } & \$ 1 \\\hline\end{array}$$  
If there is no charge to use the highway, then one would expect that ________ than the socially optimal number of drivers will leave at 8 a.m. because ________.

• A)more; each driver's use of the highway imposes an external cost on other drivers by increasing the commute time
• B)more; the social marginal benefit of using the highway is greater than the private marginal benefit
• C)less; each driver's use of the highway imposes an external cost on other drivers by increasing the commute time
• D)less; the private marginal benefit of using the highway is greater than the social marginal benefit

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Definitions:

Unadjusted Year End

This term refers to the financial results and statements of a company that have not gone through adjustments for various accounting entries at the end of the fiscal year.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals to ensure a company's bookkeeping system is mathematically correct.

Allowance for Uncollectibles

A contra-asset account used to reduce accounts receivable to its net realizable value by estimating the amount of receivables that may not be collected.

Gross Accounts Receivable

The sum of money that a company's customers owe before subtracting any provisions for accounts that might not be collectible.