Reference no: EM132461536

Suppose the government is considering an increase in the toll on a certain stretch of highway from $.40 to $.50. At present, 50,000 cars per week use that highway stretch; after the toll is imposed, it is projected that only 45,000 cars per week will use the highway stretch.

Assuming that the marginal cost of highway use is constant (i.e., the supply schedule is horizontal) and equal to $.40 per car

What is the change in social surplus attributable to the increase in the toll?

(Hint: The toll increase will cause the supply schedule, not the demand schedule, to shift.)