The Following Data Show the Relationship Between the Number of Drivers

question 99

Multiple Choice

The following data show the relationship between the number of drivers who leave for work at 8:00 am,their average commute times,and their marginal benefit associated with the commute times. $$\begin{array} { c c c } \begin{array} { c } \text { Number of drivers } \\\underline { \text { that leave at 8:00am }}\end{array} & \begin{array} { c } \text { Average commute } \\\underline { \text { time to downtown }}\end{array} & \begin{array} { c } \text { Marginal } \\\underline { \text { Benefit }}\end{array} \\ 100 & 30 \text { minutes } & \$ 10 \\200 & 65 \text { minutes } & \$ 8 \\300 & 110 \text { minutes } & \$ 4 \\400 & 170 \text { minutes } & \$ 3 \\500 & 260 \text { minutes } & \$ 1\end{array}$$
Refer to the information given above.Suppose a toll is imposed in the following way: leaving between 8 a.m.and 9 a.m.costs $5 per driver,after 9 a.m. ,the toll is zero.The toll __________ because __________.

• A)reduces efficiency;citizens are paying for the highway through taxes and through the toll
• B)improves efficiency;government now has more tax revenue
• C)reduces efficiency;drivers don't change their behavior because $5 is less than the benefit of driving
• D)improves efficiency;the highway is no longer treated as having a price of zero

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Definitions:

Time Period Assumption

An accounting principle that assumes a business's complex and ongoing activities can be divided into shorter time periods, such as months, quarters, or years.

Prepaid Expense Account

An asset account that represents payments made in advance for goods or services to be received in the future.

Expenses

Outflows of resources or incurring of liabilities (or a combination of both) resulting from a company's activities intended to generate income.

Assets

Economic resources owned or controlled by a business or an individual that are expected to produce value.