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Gillespie: Foundations of Economics

Unit 4

Congestion charges
A good real life scenario to consider when examining the price elasticity of demand is the use of congestion charges to reduce traffic. This has been introduced and the price raised in London. Why not use the internet to find out more about the sensitivity of demand to these price charges?
A useful starting point is
www.bbc.co.uk/london/travel/congestion/

Train fares
At the start of 2007 the train operators announced major price increases for many rail fares. Read this article for more details.
news.bbc.co.uk/1/hi/uk/6223701.stm
Why do you think the operators increased prices?
What do you think the price elasticity of demand for rail fares is likely to be?
Why do you think the UK government regulates rail fares? Do you think it should intervene more in this market?
For more information on UK transport issues, including the railways, you can visit
www.dft.gov.uk/stellent/groups/dft_control/documents/homepage/dft_home_page.hcsp