Would someone be able to explain this graph?

When the flow of traffic is higher at F1, why is the cost per trip lower (at b) compared to F2 where the cost per trip is higher (at c)? Lower congestion should mean lower cost per trip right?

Any help would be much appreciated

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1 Answer 1


It would help if you would explain what MSC and MPC are (thankfully Google lens finds it)

  • MPC = Marginal Privat cost
  • F0 is where the cost are starting to become affected by external costs (congestion here)
  • MSC = Marginal social cost = MPC + external cost of congestion
  • D = demand for travel

The driver does not take in to account the external cost (the distance ab / difference between MSC and MPC), hence drives more than is socially optimal.

In this example, there is no monetary congestion charge. It simply shows that social costs are higher than personal costs. Therefore, more of the road is consumed (used / being driven on / F1) than is optimal for the society as a whole (F2).


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