Draw a graph of indifference curves that illustrate why offering a lower price for a failing...

Draw a graph of indifference curves that illustrate why offering a lower price for a failing public transit service, might actually cause a decrease in public service.

Expert Solution

Free travel is a poor substitute for making drivers pay genuine expenses of driving

Free anything makes individuals use it to an extreme – in principle, in any case, travel that is too modest is similarly as awful as driving that is excessively modest. Someone will wind up paying for bunches of outings that didn't generally should be made.

As noted above, individuals may feel that it's not reasonable that they need to pay for other individuals' transport tickets, regardless of whether it improves off. I'm by and by not exceptionally thoughtful – essentially every choice society makes is out of line to someone. Is it reasonable for me that we burned through $62 billion to build up the F-22 military aircraft, when I don't feel any more secure as a result of it? Be that as it may, I diverge.

As a result, this is an exceptional case to indifference curve analysis, where at a low price low units of public transit will be consumed. It is an upward sloping curve as shown below:-

When a set of indifference curves is upward sloping, it means one of the goods is a “bad” in that the consumer prefers less of the good rather than more of the good.

Rahul Sunny answered 2 years ago

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