The paper "Marginal Product, Influenza" is an outstanding example of a micro and macroeconomic assignment. Government institutions dealing with transit matters are constantly involved in the management and policing of shared passenger and for-hire transportation services. Transport is critical for social, environmental and economic achievements and therefore such institutions help to integrate it in strategic development. Services are scheduled and route fixed. Through this, demand forecasting, pricing policy, cost modeling regulatory and appraisal techniques are acquired. Perennial analysis of parameters of cost and demand must follow the dynamic competitive and ownership forms in transport.
The role of the informal sector, as well as personal vehicles, is also a major issue that is considered. Regulations force the owners or drivers that are prone to maximize profit to employ and adopt a suboptimal behavior in fare charges (Obeng, & Preston, 2008). The drivers’ assumption is that their customers’ response to the increment of fares depends on the elasticity of their wants. Unlike the demand for goods, there is no correlation between the costumers’ responsiveness to the transport service and the change in charges. In this case, the elasticity of want is great.
The willingness to pay for the service is more determined by the customer’ s necessity and consideration of duration such as high and off-peak. To them, as long as the increase in fares does not diminish the willingness to pay for the services by the public, then the government should allow demand elasticity to determine the fares (Oum, Waters, & Yong, 2001). Tax drivers, in this case, have a misguided assumption since there is always a small change in demand when they increase the charges.
Customers’ necessity and lack of substitutes in means of transport are two important scenarios that force them to use taxis. Since the need cannot be postponed there is little option for them than to pay for it. Another important factor they are not considering is that most government employees depend on the government transport allowances to cater to their fares, thus as long as they are not directly paying for it the demand is inelastic.
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