In some large cities, motorists pay a fee when they bring their vehicles into the busiest part of the city (congestion charge).
(a) Illustrate with a diagram and explain how this charge is an example of the price system at work;
(b) How do you think that the authorities would determine the level of the charge if they have a particular target for the reduction in the number of vehicles entering the congestion charge zone?
(c) Given that revenues from these congestion charges are invested in the city's transport system, how will this affect the charge level holding all other variables constant?