Suppose that technological advancements in high-speed rail transport has led some people to substitute rail travel for driving to their holiday destinations. A study by Professor Q of Nomash University found that the reduction in car travel led to fewer road traffic accidents and deaths per year, since rail travel is safer (per passenger kilometre) than car travel. a) Using the logic suggested by Professor Q, illustrate and explain with demand and supply curves how a rise in wages paid to all rail-transport employees would affect the number of road accidents and deaths per year. (Hìnt clearly identify which market you will use to analyse the question.) b) How would your conclusion to part (a) change if, in addition to the rise in wages mentioned above, there is a significant decrease in rental rates for minibuses or passenger vans? Illustrate and explain your reasoning.

Suppose that technological advancements in high-speed rail transport has led some people to substitute rail travel for driving to their holiday destinations. A study by Professor Q of Nomash University found that the reduction in car travel led to fewer road traffic accidents and deaths per year, since rail travel is safer (per passenger kilometre) than car travel. a) Using the logic suggested by Professor Q, illustrate and explain with demand and supply curves how a rise in wages paid to all rail-transport employees would affect the number of road accidents and deaths per year. (Hìnt clearly identify which market you will use to analyse the question.) b) How would your conclusion to part (a) change if, in addition to the rise in wages mentioned above, there is a significant decrease in rental rates for minibuses or passenger vans? Illustrate and explain your reasoning.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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