TRANSPORT ECONOMICS 代写Transport pricing and Cost-benefi
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代写Transport pricing and Cost-benefit analysis
TRANSPORT ECONOMICS
Assignment 2: Transport pricing and Cost-benefit analysis
Instructions:
Assignment 2 assesses your understanding of quantitative transport pricing and cost-benefit analysis.
Assignment 2 contains two general tasks (Task 1 and Task 2). Assignment 2 is worth 30 marks, with Task 1 carrying 18 marks and Task 2 carrying 12 marks.
This assignment is a group assignment. Thus, you need to enrol in a group and finish the assignment collaboratively.
The due date is the end of Week 11 (9 October 2016). If you need an extension you must apply electronically to the course coordinator via email before the submission due date. Submission extensions are not normally granted, except for other unexpected reasons. In the application you should specify a date on which you plan to submit the assignment. This date should be within one week from the posted submission date. Any requests for extensions exceeding 7 days must be submitted via RMIT’s Special consideration process. In the absence of a granted extension, late submissions will be automatically penalized by 10% per working day up to a maximum of 10 working days. Serious penalties apply for not complying with the university's regulations.
Task 1: Transport pricing
Description:
An export-importing shipping company operates a general cargo carrier service between Melbourne and other Asian ports. It hauls two major types of freight:
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manufactured items (submarket 1) and semi-manufactured raw materials (submarket
2). The demand function for manufactured items is given by:
The inverse demand function for raw materials is given by:
Finally, the total cost function for the shipping company is given by:
Required:
Task 1.1: Provide algebraic expressions for
(i) the average revenue function of each submarket.
(ii) the total revenue function of submarket 1.
(iii) the marginal revenue function of each submarket.
(iv) the overall revenue function from both markets.
(v) the overall profit function from both submarkets.
(7.5 marks, with each worth 1.5 marks)
Task 1.2: Graph TRANSPORT ECONOMICS 代写Transport pricing and Cost-benefit analysis
(i) the marginal cost curve for each submarket.
(ii) the marginal revenue curve for each submarket.
(iii) the marginal profit curve for each submarket.
(4.5 marks, with each worth 1.5 marks)
Task 1.3: Suppose the freight company may apply discriminatory charges in both
submarkets. Figure out
(i) the amount of freight carried for each submarket.
(ii) the optimal prices that maximises aggregate profit across both submarkets.
(iii) the overall profit.
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(3 marks, with each worth 1 mark)
Task 1.4: Suppose the freight company must charge a uniform price (i.e., the same
price) in both submarkets. Figure out
(i) the profit maximising price.
(ii) the amount of freight carried for each submarket.
(iii) the overall profit.
(1.5 marks, with each worth 0.5 marks)
Task 1.5: Suppose the freighting company is forced by the government to price
efficiently in each submarket. Figure out
(i). the amount of freight carried in each submarket.
(ii). the optimal price in each submarket.
(iii). the overall profit.
(1.5 marks, with each worth 0.5 marks)
Task 2: Cost-benefit analysis
Description:
The government is considering the construction of a bridge to replace a vehicular ferry
service. The bridge will cost $1.1 million, but the government will save $50,000 per
annum, the cost of providing ferry service. Also, motorists will benefit through not
having to wait and through a faster crossing. Because of this, traffic volumes are expected
to increase over their initial levels. Given this, the government’s advisers have estimated
the flow of costs and benefits (in $ ‘000) as follows.
Task 2.1: Draw a table with annual net cash inflows and outflows. (3 marks)
Task 2.2: If the discount rate is 10%, what is the net present value? Is the project worthwhile?
(3 marks)
Task 2.3: Suppose that the estimated life of the bridge is extended by 10 years. What impact
does this have on the result? (Assume discount rate is 10%, operating cost savings continue at
$50,000 and time savings continue at $110,000 per annum). (3 marks)
Task 2.4: Suppose now the discount rate is 5% (the bridge life is 20 years). What impact does
this have on the result? (Assume bridge life is unchanged, operating cost savings continue at
$50,000 and time savings continue at $110,000 per annum). (3 marks)
TRANSPORT ECONOMICS 代写Transport pricing and Cost-benefit analysis
