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TEC711S-TRANSPORT ECONOMICS-2ND OPP-JAN 2025 |
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nAmlBIA unlVERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ECONOMICS
QUALIFICATION CODE:
07BECO
COURSE CODE: TEC711 S
SESSION: JANUARY 2025
DURATION: 3 HOURS
LEVEL: 7
COURSE NAME: TRANSPORT ECONOMICS
PAPER: THEORY
MARKS: 100
SECOND 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 The link between freight transp01i levels and economic wealth has never been in
question, as the two are highly correlated. However, there remain questions over the
direction of causation between the two classical notions, namely supply led view and
demand led view. Discuss the supply led notion in view of what the proponents
advance.
(6)
1.2 Explain the following concepts in transport economics:
(6)
a) Technical efficiency
b) Cost efficiency
c) Allocative efficiency
1.3 You are given the following information for Bus services as: Income rose from N$20
000 to N$30 000 and 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 the product 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 50/km to 60/ km. Calculate the cross-price
elasticity of demand for Bus and interpret your answer based on the nature of the
product, and form of elasticities being compared.
(4)
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QUESTION2
[20 MARKS]
2.1 Traffic congestion has become a problem these days in some congested routes in the
city of Windhoek, leading to lower speed, longer trip times and increased vehicular
queuing. Advice the city of Windhoek on the ways and means to address traffic
congestion in Windhoek.
(10)
2.2 An entrepreneur from Angola is contemplating to supply busses and trucks to the
Namibian transport operators. She wants to be sure her business is successful. Advise
her as a transport economist on what are the five (5) factors that she will need to take
into consideration regarding the supply of her products?
(10)
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QUESTION3
[20 MARKS]
3.1 Price discrimination is a common pricing strategy in the transport sector.
a) State and elaborate the three conditions that must exist for price discrimination to
take place in this industry.
(6)
b) Explain the three categories s of price discrimination
(6)
3.2 Distinguish between marginal cost pricing and price discrimination
(4)
3.3 In the graph below, explain the two concepts illustrated for a shoe factory that has been
in operation for 50 years.
(4)
HPf-
I SC<IO
_________ ,.._..;;;.
------•
Ir p J
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QUESTION 4
[20 MARKS]
4.1 With the aid of a diagram, explain why the monopolist transport operator is regarded as
economic inefficient and presents the main arguments behind this kind of outcome. (10)
4.2 Transport operators in oligopolistic markets practice predatory pricing and price-fixing
from time to time. Describe what you perceive to be the benefits to transport operators
of such practices and the reasons why they are illegal in many countries worldwide.
(6)
4.3 Discuss any four assumptions of the theory of contestability as one of the disadvantages
that a new monopolist firm who operates a new plant may not be able to meet. (4)
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QUESTION 5
[20 MARKS]
5.1 Study the following cost table and fill in the missing values, show your answers
according to the listing indicated in the table from a) tot)
(10)
Quantity
of output
0
10
20
30
Total
fixed
cost
(a) .....
Total
variable
cost
0
(b) ........
800
900
Total
cost
1200
1800
(c) ......
(d) ......
Average
fixed cost
(e) .....
(J) .......
(g) .....
(h) ......
Average
variable
cost
(i) .......
(j) .......
(k) ........
(I) ........
Average
(total)
cost
(m) .......
(n) ........
(o) .......
(p) .......
Marginal
cost
(q) .....
(r) .......
(s) ......
(t) ......
(0.5 mark per each correctly filled answer)
5.2 Cost - Benefit Analysis is an evaluation approach used by many organisations in the
evaluation of their programs or projects. Discuss how this approach is used and what are its
main limitations when compared to other approaches?
(10)
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