question 28

Essay

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A)Sarah drives 6 miles to work everyday.Liam takes the same route but has to drive for a total of 11 miles.With the objective of reducing traffic jams,the government decides to impose a tax on drivers.How would an annual fixed payment of $500 as congestion charges affect Sarah and Liam? Explain your answer using indifference curves and a common budget line for Liam and Sarah.

• A)Sarah drives 6 miles to work everyday.Liam takes the same route but has to drive for a total of 11 miles.With the objective of reducing traffic jams,the government decides to impose a tax on drivers.How would an annual fixed payment of $500 as congestion charges affect Sarah and Liam? Explain your answer using indifference curves and a common budget line for Liam and Sarah.

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Definitions:

Deliberate

Intentionally considering or planning something.

Compensation

Payment or benefits provided to an employee or an individual for services rendered or as reparation for loss.

Negligent

Failing to take proper care in doing something, resulting in damage or harm to another party.

Automobile

A wheeled motor vehicle used for transportation, typically fueled by gasoline, diesel, or electricity.