# Exhibit Descriptions

## Description of Exhibit 1

Exhibit 1 shows an influence diagram for freight economics. This diagram maps highway investment to key freight variables such as shipment characteristics and inventory stock. The diagram shows how each of these variables either causes exponential growth in the freight industry or causes factors to approach their practical limits in growth owing to the supply/demand curve. The diagram also provides insight into time dependencies within the system.

## Description of Exhibit 2

Exhibit 2 is a plot diagram showing the relationship between total logistics cost and number of warehouses. There are curves representing inventory cost, warehousing cost, and transportation cost.

As the number of warehouses increase, transportation cost decreases. The cost of warehousing increases but eventually tapers off. The inventory cost increases but does not taper off. The plot does not show cost of lost sales. Total cost, the sum of the other three curves, increases.

## Description of Exhibit 3

Exhibit 3 is a graph showing the relationship between cost in dollars and types of transportation services. There are curves representing total cost, direct transportation costs, in-transit inventory costs, buyer's inventory costs, and ordering costs.

As the transportation services used provide lower average delivery times and lower average delivery time variability, total cost decreases, but eventually levels off and then rises. Direct transportation costs increase proportionally, while in-transit inventory costs decrease steadily. Buyer's inventory costs decrease, while ordering costs remain constant throughout.

## Description of Exhibit 4

Exhibit 4 is a graph showing the relationship between total relevant costs in dollars and the quantity ordered, or uppercase Q. There are curves representing total costs, carrying costs, and procurement and out-of-stock costs.

As uppercase Q increases, total costs initially decrease, but eventually level off and then rise. Carrying costs increase proportionally with uppercase Q, while procurement and out-of-stock costs decrease steadily. Uppercase Q asterisk is the point on the uppercase Q axis at which the curves for carrying costs and procurement and out-of-stock costs intersect.

## Description of Exhibit 5

Exhibit 5 is a graph showing the cyclical relationship between inventory level and time. The diagram contains several abbreviations. Uppercase Q is order quantity, uppercase L uppercase T is lead time, and uppercase R is the reorder point, which is a line indicating a fixed positive value of inventory level.

As time progresses, inventory level decreases in a stepwise fashion from an initial positive value. Eventually, inventory level decreases below uppercase R, then below zero. Once inventory level decreases below zero, an inventory addition of value uppercase Q is added, increasing the inventory level to a positive value and starting the cycle again. Uppercase L uppercase T is the elapsed time between when inventory level falls below uppercase R and when the cycle restarts by the addition of uppercase Q. The stockout period is the time between when inventory level falls below zero and when the cycle restarts by the addition of uppercase Q.

## Description of Exhibit 6

Exhibit 6 is a graph showing the relationship between dollars per trip and trips per hour. Two curves, uppercase M C subscript 1 and uppercase M C subscript 2, show that the marginal cost per trip increases with the number of trips per hour.

Uppercase Q subscript 1 is a vertical line that represents a fixed number of trips per hour, and uppercase D and uppercase E are the points at which uppercase M C subscript 1 and uppercase M C subscript 2 intersect uppercase Q subscript 1. Uppercase D represents the same cost per trip as point uppercase P subscript 1 on the dollars per trip axis, and uppercase E represents the same cost per trip as uppercase P subscript 2.

## Description of Exhibit 7

Exhibit 7 is a graph showing the relationship between dollars per trip and trips per hour. There are three unlabeled curves, which start at points uppercase A, uppercase B, and uppercase C on the dollars per trip axis. These curves start at the left and progress to the right. Curves uppercase A and uppercase B increase gradually with time, while curve uppercase C decreases gradually.

Point uppercase D is the intersection of curves uppercase B and uppercase C and vertical line uppercase Q subscript 1, which represents a fixed number of trips per hour. Point uppercase E is the intersection of curves uppercase A and uppercase C and vertical line uppercase Q subscript 2. Points uppercase P subscript 1 and uppercase P subscript 2 on the dollars per trip axis have the same dollar values as points uppercase D and uppercase E respectively. Point uppercase F is the intersection of curve uppercase B and the horizontal line between uppercase P subscript 2 and uppercase E.

## Description of Exhibit 8

Exhibit 8 is a graph showing the relationship between dollars per trip and trips per hour for Here-There Road 1.

There are two marginal cost curves, uppercase M C subscript 1 and uppercase M C subscript 1 prime, which start from points uppercase E and uppercase F on the dollars per trip axis and increase with the number of trips per hour. There are also three function curves, numbered in this description for clarity. Function curve 1 represents the function uppercase D subscript 1 with input uppercase P subscript 1 and uppercase P asterisk subscript 2, function curve 2 represents the function uppercase D subscript 1 with input uppercase P subscript 1 and uppercase P double asterisk subscript 2, and function curve 3 represents the function uppercase D subscript 1 with input uppercase P subscript 1 and the output of function uppercase P subscript 2 with input uppercase P subscript 1.

Function curves 1 and 2 decrease as trips per hour increases, while function curve 3 decreases very quickly as trips per hour increase. Point uppercase B is the intersection of uppercase M C subscript 1 and function curves 1 and 3, and a horizontal line connects it to point uppercase P asterisk subscript 1 on the dollars per trip axis. Point uppercase A is the intersection of function curve 2 and this line. Point uppercase D is the intersection of uppercase M C subscript 1 prime and function curves 2 and 3, and horizontal line connects it to point uppercase P double asterisk subscript 1. Point uppercase G is the intersection of uppercase M C subscript 1 and this line. Point uppercase C is the intersection of this line and function curve 1.

## Description of Exhibit 9

Exhibit 9 is a graph showing the relationship between dollars per trip and trips per hour for Here-There Road 2. There are three curves, marginal cost curve uppercase M C subscript 2 and two function curves, referred to in this description as function curves 1 and 2.

Uppercase M C subscript 2, which equals the function uppercase D subscript 2 with input uppercase P subscript 1 and the output of function uppercase P subscript 2 with input uppercase P subscript 1, increases with the number of trips per hour. Function curve 1 represents function uppercase D subscript 2 with input uppercase P asterisk subscript 1 and uppercase P subscript 2 and decreases as trips per hour increase. Function curve 2 represents function uppercase D subscript 2 with input uppercase P double asterisk subscript 1 and uppercase P subscript 2 and also decreases as trips per hour increase.

Point b is the intersection of uppercase M C subscript 2 and function curve 1 and is connected by a horizontal line to point uppercase P asterisk subscript 2 on the dollars per trip axis. Point lowercase a is the intersection of this line with function curve 2. Point lowercase c is the intersection of function curve 1 and a horizontal line from point uppercase P double asterisk subscript 2 on the dollars per trip axis. Point lowercase d is the intersection of this line, uppercase M C subscript 2, and function curve 2.

## Description of Exhibit 10

Exhibit 10 is a graph showing the relationship between dollars per widget and the number of widgets produced per year by a single manufacturing plant. There are five curves: uppercase A T C subscript 1 and subscript 2, which represent average total costs; uppercase A P C, which represents average production costs; and uppercase A D C subscript 1 and subscript 2, which represent average distribution costs.

Uppercase A T C subscript 1 and subscript 2 decrease quickly as widgets per year increases, but eventually level off, with uppercase A T C subscript 1 showing a higher end cost than uppercase A T C subscript 2. Uppercase A P C continuously decreases, first quickly then more slowly, as widgets per year increases. Uppercase A D C subscript 1 and subscript 2 increase as widgets per year increases, with uppercase A D C subscript 1 showing a higher end cost than uppercase A D C subscript 2. Lowercase w asterisk subscript 1 and subscript 2 are two vertical lines that start at the widgets per year axis and intersect uppercase A T C subscript 1 and subscript 2, respectively.

## Description of Exhibit 11

Exhibit 11 contains two graphs.

The first shows the relationship between manufacturing outlays and ton miles. There is one parabolic curve, uppercase W subscript zero, and three lines, uppercase M subscript 1, uppercase M subscript 1 prime, and uppercase M subscript 2. Uppercase M subscript 1 and uppercase M subscript 2 are tangents of uppercase W subscript zero and run from the manufacturing outlays axis to the ton miles axis. Uppercase M subscript 1 prime runs diagonally downward from the manufacturing outlays axis and intersects uppercase W subscript zero at two points, the first of which is labeled uppercase R subscript 1. Uppercase R subscript 1 is also the center of the tangent surface of uppercase M subscript 1 along uppercase W subscript zero, as well as the intersection of uppercase M subscript 1 and uppercase M subscript 1 prime. From uppercase R subscript 1 run two lines describing a rectangular area: a horizontal line to point uppercase S subscript 1 on the manufacturing outlays axis, and a vertical line to point uppercase T subscript 1 on the ton miles axis. Point uppercase R subscript 2 is the center of the tangent surface of uppercase M subscript 2 along uppercase W subscript zero, and lines run from it to points uppercase S subscript 2 and uppercase T subscript 2, describing a second rectangular area, wider and shorter than the first.

The second graph shows the relationship between dollars per ton mile and ton miles. This graph contains two rectangular areas, one described by point lowercase t subscript 1, on the dollars per ton mile axis, point uppercase T subscript 1 on the ton miles axis, and point lowercase a at the intersection of the lines from lowercase t subscript 1 and uppercase T subscript 1. The second rectangular area is described by lines connecting points lowercase t subscript 2, uppercase T subscript 2, and lowercase c, and is wider and shorter than the first. Point lowercase b is the intersection of the line between uppercase T subscript 1 and lowercase a and the line between lowercase t subscript 2 and lowercase c. Finally, a slightly parabolic downward curve touches the two rectangular areas at points lowercase a and lowercase c.

## Description of Exhibit 12

Exhibit 12 is a graph showing the relationship between dollars per trip and trips per hour for Here-There Road 1. There are five curves: the average trip cost curves uppercase A C subscript 1 and uppercase A C asterisk subscript 1, and three function curves, referred to in this description as function curves 1, 2, and 3. Function curve 1 represents the function uppercase D subscript 1 with input uppercase P subscript 1 and uppercase P asterisk subscript 2. Function curve 2 represents the function uppercase D subscript 1 with input uppercase P subscript 1 and uppercase P double asterisk subscript 2. Function curve 3 represents the function uppercase D subscript 1 with input uppercase P subscript 1 and the output of the function uppercase P subscript 2 with input uppercase P subscript 1.

Both uppercase A C subscript 1 and uppercase A C asterisk subscript 1 increase steadily with the number of trips per hour, while function curves 1 and 2 decrease steadily as trips per hour increase. Function curve 3 decreases extremely rapidly as trips per hour increases.

Points uppercase E and uppercase F are the starting points on the dollars per trip axis of uppercase A C subscript 1 and uppercase A C subscript 2, respectively. Point uppercase B is the intersection of uppercase A C subscript 1 and function curves 1 and 3. A horizontal line runs from uppercase B to uppercase P asterisk subscript 1, a point on the dollars per trip axis. Function curve 2 intersects this line at point uppercase A. Point uppercase D is the intersection of uppercase A C asterisk subscript 1 and function curves 2 and 3. A horizontal line connects uppercase D to uppercase P double asterisk subscript 1, a point on the dollars per trip axis. Uppercase A C subscript 1 intersects this line at point uppercase G, and function curve 1 intersects it at point uppercase C.

## Description of Exhibit 13

Exhibit 13 is a graph showing the relationship between dollars per trip and trips per hour for Here-There Road 2. There are three curves: average cost curve uppercase A C subscript 2 and two function curves, referred to in this description as function curves 1 and 2.

Uppercase A C subscript 2 equals the curve representing function uppercase D subscript 2 with input uppercase P subscript 1 and the output of function uppercase P subscript 2 with input uppercase P subscript 1. Function curve 1 starts from point lowercase a on the dollars per trip axis and represents function uppercase D subscript 2 with input uppercase P asterisk subscript 1 and uppercase P subscript 2. Function curve 2 starts at point lowercase c and represents function uppercase D subscript 2 with input uppercase P double asterisk subscript 1 and uppercase P subscript 2. Uppercase A C subscript 2 increases steadily with the number of trips per hour, while both function curves decrease steadily as trips per hour increases.

Function curve 1 intersects uppercase A C subscript 2 at point lowercase b, which is connected by a horizontal line to point uppercase P asterisk subscript 2 on the dollars per trip axis. Function curve 2 intersects uppercase A C subscript 2 at point lowercase d, which is connected by a horizontal line to point uppercase P double asterisk subscript 2.

## Description of Exhibit 14

Exhibit 14 is a graph that shows the relationship between dollars per trip mile and trip miles per hour. There are four function curves, referred to in this description as function curves 1 through 4.

Function curve 1 represents uppercase V lowercase t plus the product of uppercase N, uppercase V, and the derivative lowercase d t over lowercase d uppercase N. Function curve 2 represents the output of function uppercase V lowercase t with input uppercase N plus the product of 1 and lowercase phi. Function curve 3 represents function uppercase V lowercase t with input uppercase N, while function curve 4 represents uppercase N, which equals function lowercase f with input uppercase P.

Function curves 2 and 3 start at parallel points on the dollars per trip mile axis and increase at equal rates with trip miles per hour. Function curve 1 starts at point uppercase J, also the starting point of function curve 3, and increases more rapidly with trip miles per hour than function curves 2 and 3. Function curve 4 starts at point uppercase F on the dollars per trip mile axis and decreases rapidly as trip miles per hour increases.

Vertical lines connect points uppercase L and uppercase A on the trip miles per hour axis to points uppercase E and uppercase D, respectively, on function curve 1. The line from uppercase L to uppercase E also intersects function curve 3 at point uppercase K, while the line from uppercase A to uppercase D intersects function curve 3 at point uppercase B and function curve 2 at point uppercase C. Horizontal lines connect uppercase E, uppercase C, and uppercase B to points uppercase G, uppercase H, and uppercase I, respectively, on the dollars per trip mile axis.

## Description of Exhibit 15

Exhibit 15 is a graph showing the relationship between dollars per trip mile and trips per hour. There are two marginal cost curves, uppercase M C and uppercase M C prime, and an unlabeled curve that this description will refer to as curve 1.

Uppercase M C and uppercase M C prime start at points uppercase A and uppercase H, respectively, on the dollars per trip mile axis and increase steadily and nearly equivalently with trip miles per hour. Curve 1 starts at point uppercase J on the dollars per trip mile axis and decreases rapidly as trip miles per hour increases.

Curve 1 intersects uppercase M C at point uppercase B and uppercase M C prime at point uppercase E. Between uppercase B and uppercase E, a vertical line connects point uppercase D on curve 1 with point uppercase C on uppercase M C. After uppercase E, a vertical line connects point uppercase G on curve 1 with point uppercase F on uppercase M C prime.

## Description of Exhibit 16

Exhibit 16 is a graph showing the relationship of product price, or dollars per gizmo, and product demand in gizmos per week. There are two curves, Demand and Marginal Revenue, both of which are straight lines starting at point uppercase L on the product price axis and decreasing steadily as product demand increases until they intersect with the product demand axis. Marginal Revenue decreases much more rapidly than Demand.

Intersecting these two curves are five horizontal lines that start at the product price axis. From the lowest to the highest, Average Manufacturing Cost starts at point uppercase A, Average Manufacturing Cost plus Low Transportation Cost starts at point uppercase B, Average Manufacturing Cost plus High Transportation Cost starts at point uppercase C, and two unlabeled lines start at points uppercase D and uppercase E. In addition, four unlabeled vertical lines extend from the product demand axis. From left to right, these lines start at points uppercase W, uppercase X, uppercase Y, and uppercase Z.

Point uppercase F is the intersection of Demand and lines uppercase E and uppercase W; point uppercase G is the intersection of Demand and lines uppercase D and uppercase X; point uppercase H is the intersection of Demand, Average Manufacturing Cost plus High Transportation Cost, and line uppercase Y; and point uppercase I is the intersection of Demand, Average Manufacturing Cost plus Low Transportation Cost, and line uppercase Z. Point uppercase K is the intersection of Marginal Revenue, Average Manufacturing Cost plus High Transportation Cost, and line uppercase W, while point uppercase J is the intersection of Marginal Revenue, Average Manufacturing Cost plus Low Transportation Cost, and line uppercase X.

The rectangular area bounded by the product price axis and lines uppercase E, uppercase D, and uppercase X is labeled Consumer's Gain. The trapezoidal area bounded by the product price axis, Marginal Revenue, Average Manufacturing Cost plus High Transportation Cost, and Average Manufacturing Cost plus Low Transportation Cost is labeled Producer's Gain. The vertical difference between Average Manufacturing Cost plus High Transportation Cost and Average Manufacturing Cost plus Low Transportation Cost is labeled Logistics Cost Savings.

## Description of Exhibit 17

Exhibit 17 shows the relationship between price and marginal revenue on a graph with axes of price and transport demand. As the transportation demand to ship gizmos increases, the cost per shipping each gizmo decreases exponentially. The old marginal cost, represented by line uppercase C D, is realized before road improvements. Line uppercase F E represents the new margin costs after road improvements.

Marginal revenue equals old marginal cost at an output of uppercase Q subscript 1, which intersects the demand curve for price uppercase P at uppercase A and the demand curve for price one-half uppercase P at uppercase D. When transportation costs or any other costs are reduced, causing a reduction in production and distribution costs to "marginal cost new," marginal revenue equals new marginal cost at an output of uppercase Q subscript 2.

The one-half uppercase P price curve falls significantly immediately following road improvements, but, over time, begins to mirror the price uppercase P curve as transportation demand increases. Connected by horizontal lines to the price per gizmo mile axis, point uppercase A connects to point uppercase P subscript 1; point uppercase B, to point uppercase P subscript 2; point uppercase D, to point uppercase C; and point uppercase E, to point uppercase F.

## Description of Exhibit 18

Exhibit 18 illustrates the gain in productivity following road improvements. As vehicle miles increase, the cost per vehicle mile decreases. For simplicity, the relationship is illustrated as a linear one. Demand curve uppercase D shows a baseline relationship, while demand curve uppercase D prime represents the shift in demand caused by logistics reorganization.

On the vehicle miles per year axis, uppercase V M subscript 0 represents current use before road improvements at cost uppercase C subscript 0. Uppercase V M subscript 1 represents the expansion in road use as the cost in using the road lowers to uppercase C subscript 1. Uppercase VM subscript 2 represents the combined lower operating costs per vehicle mile and the logistics savings results at cost uppercase C subscript 1.

Areas lowercase a, a rectangular area formed by the cost per vehicle mile axis, a horizontal line from curve uppercase D to the cost per vehicle mile axis, a horizontal line from the axis at uppercase C subscript 1 to curve uppercase D, and a vertical line from uppercase VM subscript 0 to curve uppercase D; lowercase b, a triangular area formed by the right edge of area lowercase a, a horizontal line from uppercase C subscript 1 to curve uppercase D, and curve uppercase D; and lowercase c, a trapezoid formed by curves uppercase D and uppercase D prime, the cost per vehicle axis, and the horizontal line from uppercase C subscript 1 to curve uppercase D prime, represent the increase in surplus. Total benefit equals lowercase a plus lowercase b plus lowercase c.

## Description of Exhibit 19

Exhibit 19 illustrates a jump in the gain in proportional logistics cost savings at specific levels of time savings created by reorganization. Beginning at 0 on the delta uppercase C axis, as the ratio of the change in travel time to initial travel time increases, the change in cost increases almost linearly.

However, at lowercase z on the delta uppercase T over uppercase T axis, the point at which reorganization takes place, logistics cost savings jump considerable, to delta uppercase C subscript lowercase z on the delta uppercase C axis. The angle of slope, which represents elasticity, may also change. This exhibit illustrates this change as alpha 1 for the angle of slope for curve uppercase T 1 and alpha 2 for the angle of slope for curve uppercase T 2.

## Description of Exhibit 20

Exhibit 20 illustrates the relationship between cost savings and elasticity. As the travel time decreases, causing the ratio of the change in travel time to increase, the ratio of the cost savings increases. This comparison is nearly linear, as the best-fit plot illustrates. The graph also shows that, as the relative cost savings increase, the estimated area of elasticity of logistics costs, with respect to time, also increases.

## Description of Exhibit 21

Exhibit 21 illustrates the effect of logistics reorganization on the demand for transportation. Curve uppercase D, shown in the exhibit as a straight line, represents the demand for transportation with no reorganization effect. Curve uppercase D prime shows that, following reorganization, the demand for transportation may increase at a given price level.

Area lowercase a, a rectangular area formed by the cost per vehicle mile axis, a vertical line from uppercase V M subscript 0 to curve uppercase D, and horizontal lines from uppercase C subscript 0 and uppercase C subscript 1 to curve uppercase C, represents the immediate direct benefit to a firm in cost savings based on current road use. Area lowercase b, a triangular area formed by the right edge of area lowercase a, the horizontal line from uppercase C subscript 1 to curve uppercase D, and the vertical line from uppercase V M subscript 0 to curve uppercase D, represents the medium run net value of the increase in road use. Area lowercase c, an odd-shaped polygon formed by curve uppercase D, curve uppercase D prime, and the horizontal line from uppercase C subscript 1 to curve uppercase D prime, represents the benefit from a longer fun response to logistics reorganization.

On the vehicle miles per year axis, uppercase V M subscript 0 represents current use before road improvements at cost uppercase C subscript 0. Uppercase V M subscript 1 represents the expansion in road use as the cost in using the road lowers to uppercase C subscript 1. Uppercase V M subscript 2 represents the combined lower operating costs per vehicle mile and the logistics savings results at cost uppercase C subscript 1.

## Description of Exhibit 22

Exhibit 22 shows a revised influence diagram for freight economics (see exhibit 1). This diagram maps highway investment to key freight variables, such as shipment characteristics and inventory stock. The diagram shows how each of these variables either causes exponential growth in the freight industry or causes factors to approach their practical limits in growth owing to the supply/demand curve. The diagram also provides insight into time dependencies within the system. Revisions include consideration of logistics cost savings and the shift in demand for transport and the net logistics cost savings as a function of travel time and travel time variability changes.

## Description of Exhibit 23

Exhibit 23 illustrates the relationship between transportation demand and relative travel time savings and changes in logistics. As both the ratio of the change in transportation demands to initial transportation demands and the ratio of transportation time to initial transportation time increase, the elasticity of a firm's demand for transportation increases. This increase is nearly linear, as the best-fit plot illustrates.

## Description of Exhibit 24

Exhibit 24, which is identical to exhibit 21, illustrates the effect of logistics reorganization on the demand for transportation. Curve uppercase D, shown in the exhibit as a straight line, represents the demand for transportation with no reorganization effect. Curve uppercase D prime shows that, following reorganization, the demand for transportation may increase at a given price level.

Area lowercase a, a rectangular area formed by the cost per vehicle mile axis, a vertical line from uppercase V M subscript 0 to curve uppercase D, and horizontal lines from uppercase C subscript 0 and uppercase C subscript 1 to curve uppercase C, represents the immediate direct benefit to a firm in cost savings based on current road use. Area lowercase b, a triangular area formed by the right edge of area lowercase a, the horizontal line from uppercase C subscript 1 to curve uppercase D, and the vertical line from uppercase V M subscript 0 to curve uppercase D, represents the medium run net value of the increase in road use. Area lowercase c, an odd-shaped polygon formed by curve uppercase D, curve uppercase D prime, and the horizontal line from uppercase C subscript 1 to curve uppercase D prime, represents the benefit from a longer fun response to logistics reorganization.

On the vehicle miles per year axis, uppercase V M subscript 0 represents current use before road improvements at cost uppercase C subscript 0. Uppercase V M subscript 1 represents the expansion in road use as the cost in using the road lowers to uppercase C subscript 1. Uppercase V M subscript 2 represents the combined lower operating costs per vehicle mile and the logistics savings results at cost uppercase C subscript 1.

Net benefits are represented by areas lowercase a, lowercase b, and lowercase c—the direct benefit, the medium run demand changes, and the long run demand changes, respectively. The demand curve, uppercase D prime, does not make a uniform shift; the change depends on several variables.

## Description of Exhibit 25

Exhibit 25 illustrates that the benefits of a monopoly involve consumer gain and producer gain. This exhibit is identical to exhibit 17. It shows the relationship between price and marginal revenue for a specific instance, where the constant elasticity of demand, lowercase b, is 2.

As the transportation demand to ship gizmos increases, the cost per shipping each gizmo decreases exponentially. The old margin cost, represented by line uppercase C D, is realized before road improvements. Line uppercase F E represents the new margin costs after road improvements. Marginal revenue equals old marginal cost at an output of uppercase Q subscript 1, which intersects the demand curve for price uppercase P at uppercase A and the demand curve for price one-half uppercase P at uppercase D. When transportation costs or any other costs are reduced, causing a reduction in production and distribution costs to "marginal cost new," marginal revenue equals new marginal cost at an output of uppercase Q subscript 2.

The one-half uppercase P price curve falls significantly immediately following road improvements, but, over time, begins to mirror the price uppercase P curve as transportation demand increases. Connected by horizontal lines to the price per gizmo mile axis, point uppercase A connects to point uppercase P subscript 1; point uppercase B, to point uppercase P subscript 2; point uppercase D, to point uppercase C; and point uppercase E, to point uppercase F.

## Description of Exhibit 26

Exhibit 26 illustrates how the free flow of travel time increases exponentially as a function of capacity, represented by link load in vehicles per hour, and link travel time, in minutes. As link load and link travel time increase, the free flow of travel time also increases dramatically. The graph does not provide an estimate of marginal cost prices; however, it can serve as an indication of the potential cost savings.