In the past few years, the traffic problems in Lynn McKell's hometown have gotten worse. Now, Broad Stre is congested about half the time. The normal travel time to work for Lynn is only 15 minutes when Broad Street is used and there is no congestion. With congestion, however, it takes Lynn 40 minutes to get to work If Lynn decides to take the expressway, it will take 30 minutes, regardless of the traffic conditions. Lynn's utility for travel time is U(15 minutes)=0.9, U(30 minutes)=0.7, and U(40minutes)=0.2. Question 18 Which route will minimize Lynn's expected travel time?
In the past few years, the traffic problems in Lynn McKell's hometown have gotten worse. Now, Broad Stre is congested about half the time. The normal travel time to work for Lynn is only 15 minutes when Broad Street is used and there is no congestion. With congestion, however, it takes Lynn 40 minutes to get to work If Lynn decides to take the expressway, it will take 30 minutes, regardless of the traffic conditions. Lynn's utility for travel time is U(15 minutes)=0.9, U(30 minutes)=0.7, and U(40minutes)=0.2. Question 18 Which route will minimize Lynn's expected travel time?
Chapter5: Supply, Demand, And Price: Applications
Section5.11: Application 11: Supply And Demand On A Freeway
Problem 2ST
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Transcribed Image Text:In the past few years, the traffic problems in Lynn McKell's hometown have gotten worse. Now, Broad Stree
is congested about half the time. The normal travel time to work for Lynn is only 15 minutes when Broad
Street is used and there is no congestion. With congestion, however, it takes Lynn 40 minutes to get to work.
If Lynn decides to take the expressway, it will take 30 minutes, regardless of the traffic conditions. Lynn's
utility for travel time is U(15 minutes)=0.9, U(30 minutes)=0.7, and U(40minutes)=0.2.
Question 18
Which route will minimize Lynn's expected travel time?
Broad Street
Expressway
Question 19
Which route will maximize Lynn's utility?
Broad Street
Expressway
Question 20
When it comes to travel time, is Lynn a risk seeker or a risk avoider?
Risk seeker
Risk avoider
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