Question

The current toll for the use of a certain toll road is $50. A study conducted...

  1. The current toll for the use of a certain toll road is $50. A study conducted by

the state highway department determined that with a toll of p dollars, q cars will

use the road each day, where q = 60,000e^-0.5p

  1. Find an expression for the Elasticity of Demand, E(p) [4]

  1. Is the demand Elastic or Inelastic at the current toll price?                     [2]
  1. If the state increases the toll slightly, will the revenue increase of decrease?                                                                                                                        [1]
  1. Should they consider raising the toll to any more than $2? Why or why not?

                                                                                                                        [3]       

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