Question
a) State the manner in which transportation creates each of the following forms of utility i. Time Utility (2 marks) ii. Place Utility (2 marks) iii. Quantity Utility (2 marks) b) Briefly explain how each of the following factors affects the Demand for transport services i.Income (2 marks) ii. The price of related goods and services (2 marks) A bus company with an exising fleel t of 20050-seater buses increases its fleet size b 10% and r reduces its 15 Calculate the consumer surplus, and th price elasticit that the existing buses had a load fact of 80% and it is exp expected that the increase in LOS will result in a load factor of 90% (10 marks
Solution
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(181 Votos)
Gabriel
Mestre · Tutor por 5 anos
Resposta
a) **Transportation and Utility Creation**i. **Time Utility**: Transportation creates time utility by ensuring that goods and services are available when they are needed. For example, transporting fresh produce from farms to markets quickly ensures that consumers can purchase and consume them while they are still fresh.ii. **Place Utility**: Transportation creates place utility by moving goods from locations where they are not needed or valued to places where they are in demand. For instance, transporting manufactured goods from factories to retail stores allows consumers to access products conveniently.iii. **Quantity Utility**: Transportation contributes to quantity utility by enabling the delivery of goods in the desired quantities. Efficient transportation systems ensure that there is a consistent supply of products, preventing shortages or surpluses in the market.b) **Factors Affecting Demand for Transport Services**i. **Income**: As income levels rise, individuals and businesses may demand more transport services due to increased purchasing power. Higher incomes can lead to more frequent travel, the use of premium transport options, and greater consumption of goods that require transportation.ii. **The Price of Related Goods and Services**: The demand for transport services is influenced by the price of related goods and services, such as fuel prices, vehicle maintenance costs, and alternative modes of transport. If the price of these related goods increases, it may lead to a decrease in demand for transport services as people seek cheaper alternatives or reduce travel.c) **Bus Company Scenario**To calculate the consumer surplus and price elasticity, we need additional information such as the initial and new prices, the change in quantity demanded, and the demand curve. However, I can guide you through the general approach:1. **Consumer Surplus**: Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. It can be calculated using the area under the demand curve above the price level.2. **Price Elasticity of Demand**: This measures how sensitive the quantity demanded is to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.Given the scenario:- Initial fleet size = 200 buses- Increase in fleet size = 10% → New fleet size = 220 buses- Initial load factor = 80%- Expected load factor after increase = 90%Without specific price and demand data, precise calculations cannot be made. However, generally, an increase in fleet size and load factor suggests improved service capacity and potentially higher consumer surplus if prices remain constant or decrease. To find exact values, detailed data on pricing and demand changes would be necessary.