Difficulty: Medium
Correct Answer: if both Assumption I and II are implicit
Explanation:
Introduction / Context:
Introducing a congestion tax seeks to raise targeted revenue and to manage demand or fund capacity. For such a measure to be coherent, policymakers must assume that the levy will produce meaningful receipts toward the identified costs and that the payer base can bear the additional charge without making the policy self-defeating. These two assumptions concern fiscal adequacy and payer affordability, respectively.
Given Data / Assumptions:
Concept / Approach:
Taxes intended for service improvement presume two things: a base that can pay and revenue that can help fund the solution. If either fails, the rationale collapses: the tax would either not be collectible at the needed level or would not finance the intended resources. Hence both I and II are minimally required.
Step-by-Step Solution:
Verification / Alternative check:
If collections were trivial, or if travelers could not pay, the measure would not help address congestion-related costs, contradicting the stated purpose.
Why Other Options Are Wrong:
Common Pitfalls:
Assuming the tax must fully fund all costs; the assumption is partial adequacy, not total coverage.
Final Answer:
Both Assumption I and II are implicit.
Discussion & Comments