If government decides not to charge for access to a highly demanded highway, which of the following is most likely to happen?
a. Government will keep capacity the same.
b. Government increase capacity to reduce congestion.
c. Government will encourage telecommuting.
d. Government will produce an inefficient level of highways to maximize social welfare.
Question 2
The above figure shows supply and demand curves for milk. If the government passes a 2 per gallon specific tax, the welfare loss will equal
A) j.
B) f + g.
C) b + c + f + g.
D) c + g.
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