Transport Economics

Question 1

Define the term transport.

Answer 1

Transport is the movement of people or goods for various personal and business reasons.

Question 2

Define the term derived demand?

Answer 2

Derived demand occurs when the demand for a particular product depends on the demand for another product or activity.

Question 3

What are the drivers of demand for passengers?

Answer 3

Price
Price of substitutes
Income
Quality

Question 4

What are the drivers of demand for freight?

Answer 4

Price
Price of substitutes
Speed and quality of services
Nature of goods to be moved

Question 5

Define the term market concentration.

Answer 5

Market concentration is the degree to which the output of an industry is dominated by its largest producers.

Question 6

What is allocative efficiency?

Answer 6

Allocative efficiency occurs when consumers pay a market price that reflects the PMC of production.

Question 7

What is productive efficiency?

Answer 7

Productive efficiency occurs when a firm is combining resources in such a way as to produce a given output at the lowest possible average total cost.

Question 8

What are the characteristics of a perfect competition market?

Answer 8

Allocative and productive efficiency in long-term equilibrium.
Low BTE.
Many buyers and sellers.
Homogenous goods.
All firms have similar market share
All firms have perfect market knowledge.
No externalities