You should be able to answer the following question by the end of this worksheet;

Explain why the level of road traffic has been increasing in most major urban areas. Is this trend likely to increase in the near future?

How is market equilibrium determined for road use?
What would cause the price and quantity to change?

Use the Tackling traffic congestion simulation to answer the following questions.

1. Define the term price mechanism.
2. Define the term substitute good (give an example).
3. Define the term complementary good (give an example).
4. Describe what has been happening to traffic patterns in the UK.

Draw a supply and demand diagram to represent (i) private car use, (ii) use of public transport.
What relationship is there between these two markets?
Using supply and demand analysis, model the outcome of a fall in the costs of bus drivers on the two markets.

Use the Tackling traffic congestion simulation to answer the following questions.

For each of the following policies, (i) increase in road charges, (ii) the introduction of a subsidy on public transport, and (iii) increase the road user charges and introduce a subsidy on public transport, answer the questions;

1. Name the policy.
2. What happened to the quantity of:
   1. car traffic
   2. bus traffic
   3. underground traffic?
3. Would you expect this outcome? Explain your answer

Back to supporting notes »»