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The state of New York receives $3 billion (from federal sources and a state

petroleum tax) to be spent on highways and/or mass transit (subways, buses, and urban rail lines), both of which could be used to meet the transportation needs of the state’s population.

a. If each mile of mass transit costs $20 million, what is the maximum number of miles of mass transit that these funds would have enabled the state to construct?

b. If each mile of highway costs $10 million, what is the maximum number

of miles of highways that these funds would have enabled the state to

construct? c. If the number of miles of mass transit constructed is put on the vertical

axis of a graph and the number of miles of highways constucted is put

on the horizontal axis, can a budget line (showing the maximum number

of miles of mass transit that can be constructed, given each number of

miles of highways constructed) be drawn for the state? If so, what is the

slope of this budget line? (Assume that the $3 billion is the only source of

funds for mass transit or highway construction.) d. If the public and the state government agree that every extra mile of mass transit adds three times as much to the state’s transportation capability as

an extra mile of highways, how much of the $3 billion should be spent on

mass transit if the objective is to maximize transportation capability?