One of the three traffic control improvement must be done. Conduct a B/C analysis and identify which one is favored. The improvement will be required for the foreseeable future. Use an interest rate of 6.00%. The current situation is estimated to have annual accident costs of 60,000. Option A B C
Installed Cost 110,000 90,000 140,000
Annual Repair, operating cost 8,000 6,000 5,000
Estimated Annual Accident Cost 23,000 28,000 30,000
Estimated Annual Travel time cost increase 10,000 9,000 4,500
Life (Yrs.) 12 10 18

Required:
a. What is the annual accident reduction benefit from option A, B and C?
b. Which option is the best public investment?

Suppose that fixed costs for a firm in the automobile industry (start-up costs of factories, capital equipment, and so on) are $5 billion and that variable costs are equal to $17,000 per finished automobile. because more firms increase competition in the market, the market price falls as more firms enter an automobile market, or specifically, , where n represents the number of firms in a market. assume that the initial size of the u. s. and the european automobile markets are 300 million and 533 million people, respectively. a. calculate the equilibrium number of firms in the u. s. and european automobile markets without trade. b. what is the equilibrium price of automobiles in the united states and europe if the automobile industry is closed to foreign trade? c. now suppose that the united states decides on free trade in automobiles with europe. the trade agreement with the europeans adds 533 million consumers to the automobile market, in addition to the 300 million in the united states. how many automobile firms will there be in the united states and europe combined? what will be the new equilibrium price of automobiles? d. why are prices in the united states different in (c) and (b)? are consumers better off with free trade? in what ways?