Question

Generalized costs include the value of time as well as money. The new busway in Winnipeg, greatly reduces travel time between the downtown and the University campus, especially during the morning and afternoon rush hours.

15%      a)      Use an appropriate economic model(s) to illustrate how the new busway changes the generalized costs of the choices available to consumers and how this could vary throughout the day.

15%      b)      Time and money are important drivers in passenger transport demand, but not the only influences. Identify and describe three or more other factors that could influence consumers’ generalized cost of using the new busway.

Answer 1

a.

It can be seen from the graph that before the busway, consumers trying to go to a certain location had a higher generalized cost C1. So the demand was less D with the number of trips T1. With a new bus stop, generalized cost fell (C2), as it took a lower time to reach the destination. The number of trips they could take increased (T2), so demand increases. This pattern will follow throughout the day.

b.

Just building a bus stop, which reduces the time for trips, doesn't just help demand that bus stop. Certain factors have to be also considered:

• Waiting time or the frequency of buses in that route. The higher the number of buses going through that route, the more will be the demand.
• Another would be the cost of travel. If the ticket's cost rises with the buses on that route, the demand will be less. The cost has to either remain constant or decrease to boost demand.
• Service quality - operating speed, reliability, and comfort. Whether the route goes through a smelly location where waste is dumped, services available through the route, such things can affect the bus stop demand.