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TEC711S-TRANSPORT ECONOMICS-1ST OPP- NOV 2024 |
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nAm I BI A u n IVE RS ITY
OF SCIEn CE Ano TECH n OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ECONOMICS
QUALIFICATION CODE:
07BECO
LEVEL: 7
COURSE CODE: TEC711 S
SESSION: NOVEMBER 2024
DURATION: 3 HOURS
COURSE NAME: TRANSPORT ECONOMICS
PAPER: THEORY
MARKS: 100
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER(S) Ms Precious Mwikanda
MODERATOR:
Mr Makaisapi Tjiumbirua
INSTRUCTIONS
1. Answer in the provided answer book. Start each question on a new page.
2. Do not forget to write your student number correctly.
3. Items permissible: calculator, pens, pencil.
4. Answer all questions in the context of the subject knowledge you acquired from this
course and any other relevant materials you consulted.
THIS QUESTION PAPER CONSISTS OF 6 PAGES (Including this front page)
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QUESTION 1
[20 MARKS]
1.1 Discuss the two sources of basic demand from a transport service perspective. (6)
1.2 "The proponents of monopoly argued that: if the market is a contestable market, it could
as well be left to a monopoly operator. This is because it does not really need to be
operated by perfect competitive operator to produce economically efficient market
behaviour". Use the theory of contestability by Baumol (1982) to support the above
statement, your answer should be half a page but not full page.
(4)
1.3 Demonstrate with graphs and clear explanations how the owner of a Freight company
who is experiencing financial strain can make use of price elasticity of demand to make
decisions regarding the total revenue position his/her Firm.
(10)
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QUESTION2
[20 MARKS]
2.1 Given the following information for a Bus Transport service: Income rose from N$20
000 to N$30 000 and the demand for bus went from 100 passengers to 60 passengers.
a) Calculate income elasticity of demand for Bus and interpret your answer based
on the nature of products, and form of elasticities being compared.
(4)
b) Now assume there is a competitor for bus service above, Yango dedicated
transport service, the price for Yango increases from N$50/km to N$60/ km.
Calculate the cross-price elasticity
and interpret your answer based on the
nature of products, and form of elasticities being compared.
(6)
2.2 The government of Namibia is contemplating as to whether it should upgrade the Hosea
Kutako International Airport. The Minister of Works and Transport believes that doing
so will increase trading activity between Namibia and other Countries. Discuss the
multiplier impact that this project will have in general by describing the multiplier
effects at each economical stage of the project.
(10)
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QUESTION3
[25 MARKS]
3 .1 One of the characteristics associated with monopoly firm is barriers to entry. Discuss
the structural and strategic barriers associated with monopoly.
(10)
3 .2 Use the table below to answer the following questions.
Output
0
1
2
3
4
5
6
7
8
9
10
Total
Fixed
Cost
30
Total
Variable
Cost
30
58
70
85
160
201
Total
Cost
30
71
79
135
160
Average
Fixed
Cost
Average
Variable
Cost
Average
Total
cost
Marginal
Cost
a. Complete the above cost table of a bus service operating between Walvis Bay and
northern routes. Copy the table into your answer book and complete it (0.2 mark for
each coITect answer) .
(12)
b. At what level of output would this firm obtain optimum efficiency? Give reasons for
your answer. Label the row where you find your answer
(3)
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QUESTION 4
[20 MARKS]
4.1 "profit maximising position of a Firm in a transport sector need not necessarily produce
profit". Confirm this statement, by drawing a graph to illustrate your point and explain
your graph clearly.
(10)
4.2 When optimal pricing strategies are devised, what are the three motives that a private
firm owner should take into considerations?
(3)
4.3 "Transpmi by itself is not a sufficient condition for development; however, the lack of
transport infrastructure can be seen as a constraining factor on development". Broadly
discuss the effects of Namibia's transport system on the tourism sector.
( 7)
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QUESTION 5
[15 MARKS]
5.1 Distinguish between qualitative and quantitative regulation of transport.
(4)
5.2 Discuss any 5 relevant methods that government can use to address the environmental
impact associated with road transport in any country. List the method and discuss in
detail.
(I 0)
5.3 What is meant by project appraisal for a transport project?
(1)
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