A Congestion Toll Imposed on a Highway Driver to Force

question 160

True/False

A congestion toll imposed on a highway driver to force the driver to take into account the increase in travel time she imposes on all other drivers is an example of internalizing the externality.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, typically from profits.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing surplus or loss.

Investment Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.

Interest Rate

The percentage charged by lenders to borrowers for the use of money, typically expressed at an annual rate.