Transport Economics

Theory, application and policy

by Graham Mallard and Stephen Glaister

Chapter 9

Essay questions

  1. “All pollution should be eliminated.” - Discuss.
  2. Discuss the need for sustainable development and whether this should be of the strict or relative form.
  3. With reference to the transport sector, outline the three ways of explaining an externality.

Exercises

  1. A market is characterised by the following conditions:

    MSC = MPC = 20Q
    MSB = 600 - 10Q
    MPB = 600 - 20Q

    Calculate each of the following, using a diagram to illustrate your answers:

    (a) The free market output.
    (b) The free market price.
    (c) The socially efficient output.
    (d) The socially efficient price of the good.
    (e) The value of the positive externality caused in the market.
    (f) With reference to the transport sector, suggest a possible situation that this model could be illustrating.