Market price of road space in a competitive equilibrium

Assignment Help Microeconomics
Reference no: EM132365211

Economics for Managers

Learning Outcome

Unit Learning Outcome (ULO)
ULO 1: Interpret and apply basic principles and their effect on individual economic decisions (microeconomics), the economy as a whole (macroeconomics) and how economic indicators (data) are used to validate these economic behaviours.
ULO 2: Apply economic principles to the analysis of important decisions confronting the management of business organisations.
ULO 3: Critically evaluate existing economic theories in the context of real and contemporary national and international circumstances.

Question 1:

In your own words, summarize the article, "Road Congestion in Australia" by the Australian Automobile Association, October 2018

In particular, what are the main messages of the article? [Hint: Please link your summary with relevant economic theories wherever you can]

Question 2:

Suppose there is a competitive market for road space. The demand for road space falls as the price rises (due to the income and substitution effects). The supply for road space is fixed, which means that the supply curve is vertical. Use appropriate diagrams to answer the following questions:

(a) What is the market price of road space in a competitive equilibrium?
(b) Suppose that road space is a public good, which is freely available to individuals. How much is the excess demand for road space?
(c) Suppose we measure congestion by the amount of excess demand for road space. Can a rise in fuel taxes and car taxes reduce congestion?
(d) Can building more roads reduce congestion? Would your conclusions change if, with more roads, individuals were encouraged to drive more?

Question 3:
Do you think a road-pricing system by charging the use of road space is a good policy to reduce traffic congestion in Australia? Why or why not? Use appropriate diagrams to support your answer. [Hint: Please do literature review to find out the pros and cons of the road-pricing system in terms of economic efficiency and social equity, etc.]

Question 4:
Find two other cities that are among the most congested cities in the world. Give a brief description about the congestion-easing policies in these cities. [Hint: If possible present concrete facts and figures]. Provide your views or suggestions on the best measure/policy to reduce road congestion in Australia.

Reference no: EM132365211

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Reviews

len2365211

9/3/2019 3:41:20 AM

Question 4 Demonstrates no Demonstrates limited Demonstrates Demonstrates a Demonstrates very Demonstrates GLO8: (10 marks) understanding of the understanding of the acceptable level of reasonable level of good sophisticated extraordinary complexity of global/ complexity of global/ understanding of the understanding of the understanding of the understanding of the cultural / ethical cultural / ethical complexity of global/ complexity of global/ complexity of global/ complexity of global/ perspectives or of perspectives or of cultural / ethical cultural / ethical cultural / ethical cultural / ethical professional practice professional practice perspectives or of perspectives or of perspectives perspectives professional practice professional practice

len2365211

9/3/2019 3:41:14 AM

Question 3 Demonstrates no Demonstrates a Creates an acceptable Demonstrates a Skilfully extends an Proposes several GLO5: (10 marks) ability to limited ability to new solution, object reasonable level of existing idea. exemplary creative, independently independently or idea; proposes one initiative in planning Demonstrates a very novel solutions to construct a clear construct a clear and or more acceptable and identifies multiple high level of initiative existing and/or new statement about a statement about a creative solutions to approaches for in planning and situations in complex problem or complex problem or existing and/or new researching and identifies multiple, professional practice. research hypothesis research hypothesis situations in solving complex innovative Provides correct professional practice problems. Provides approaches. Provides diagrams matching the relevant diagrams good diagrams argument.

len2365211

9/3/2019 3:41:07 AM

Question 2 Poor or missing Inadequate Mostly adequate Discriminates between Systematically Information is taken GLO4: (10 marks) analysis of theories; demonstration of demonstration of assertion and discriminates between from source(s) with a inconsistent argument critical analysis of critical analysis of information assertion and very high level of or argument with no relevant theories and theories and models, substantiated by information interpretation. supporting evidence. models; poor yet some robust evidence. substantiated by Provides correct Always confuses facts reasoning and inconsistencies remain Provides relevant robust evidence. diagrams and and personal opinion. argument with no in the arguments diagrams with Provides good interpretation (e.g. No or little supporting evidence. reasonable diagrams and illustrations, charts, interpretation Often confuses facts interpretation (e.g. interpretation (e.g. graphs etc.) and personal opinion illustrations, charts, illustrations, charts, graphs etc.) graphs etc.)

len2365211

9/3/2019 3:40:58 AM

Performance Levels/Criteria N (0-2.9 marks) N (3-4.9 marks) P (5-5.9 marks) C (6-6.9 marks) D (7-7.9 marks) HD (8-10 marks) Question 1 Provides an Summary of the given Demonstrates Demonstrates the Summary of the of the Summary of the of the GLO1: (10 marks) explanation that is not article may be superficial knowledge ability of accurate given article is good given article is high consistent with the coherent but provides of the existing understanding of the standard; provides standard; provides existing economic incorrect economic theories theories good interpretation correct interpretation theories interpretation

len2365211

9/3/2019 3:40:46 AM

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