Problem
Draw a diagram of this nation's market for automobiles, which are a substitute for buses. Explain how the government policy you discussed in part (b) of Problem 5-5 is likely to affect the market price and equilibrium quantity in the country's auto market. How are auto consumers affected by this policy to attain the spillover benefits of bus transit?
Problem 5-5
A nation's government has determined that mass transit, such as bus lines, helps alleviate traffic congestion, thereby benefiting both individual auto commuters and companies that desire to move products and factors of production speedily along streets and highways. Nevertheless, even though several private bus lines are in service, the country's commuters are failing to take the social benefits of the use of mass transit into account.
a. Discuss, in the context of demand-supply analysis, the essential implications of commuters' failure to take into account the social benefits associated with bus ridership.
b. Explain a government policy that might be effective in achieving the socially efficient use of bus services.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.