The city of Stanford is considering building a bridge across a river that runs t

Question

The city of Stanford is considering building a bridge across a river that runs through the city. Currently, 1.5 million people have to drive around the river for 1 hour to get to the other side of the city. There have been complaints about congestion and pollution on the road. The new bridge will cut commuter time by half. It is expected that 1 million commuters will use the bridge on a daily basis, increasing to 2 million in the next 10 years. The new bridge will cost $80 million to build and it will cost $100,000 to maintain every year. The city is planning to charge a toll of $2 per trip for the use of the bridge. The new bridge is also expected to reduce congestion on the current road.

Based on your understanding of project evaluation:

Discuss the potential costs and benefits. Be comprehensive( no need for calculations just discuss them)

Explanation / Answer

Potential benefits

would be reduced congestion , pollution

* time saved while commuting from one part to other part of country

* increased utility in terms of hours saved during journey

* increased traffic between two parts of country

* improved transportation can increase trade , increased trade can boost GDP.

Potential Cost

* Opportunity cost of amount required to bulid the bridge and above that cost required to maintain the bridge.

* Actual cost incurred in building and maintaining the bridge.

* Toll charged could be a burden on commuters which will end up consuming less goods due to less income left out after paying taxes.

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