Exam (elaborations)
trl2602 ASSESSMENT 01 SEMESTER 2 2022
- Institution
- University Of South Africa (Unisa)
trl2602 ASSESSMENT 01 SEMESTER 2 2022
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QUESTION 1, 1.1 Identify and discuss the reasons why transportation in the economy is important. (5)
To begin with, transport creates place and time utility using scarce resources, making it a scarce
economic service that must be utilized to its full potential. Here, we will not discuss further this
characteristic of transport, which is at the core of the present course and of Transport Economics.
A second reason for the necessity of transportation is that it serves a variety of activities, including
economic activities such as production and consumption. A community's economy is significantly
influenced by the ability of transport to provide, or increase, access and mobility by reducing the
cost of bridging distances.
An expanding community's production and consumption activities create greater opportunities
for specialisation, division of labor, and product differentiation, resulting in a greater need for
transportation. As a result, transport plays a passive role in facilitating greater quantities of
transport simply because the demand for transport has increased. In contrast, more efficient
transport combined with a decrease in transport costs can create greater opportunities for
specialization and division of labor, as well as product differentiation. This is a case where
transport stimulates economic growth and plays a significant role. Transport costs have been
lowered, allowing for greater quantities to be transported. The decentralization of economic
activities and the expansion of domestic and foreign trade can be significantly impacted by lower
transport costs (Unisa 2012).
Production and service provision can be considered integral to transport. It is impossible to
produce or provide services unless the scarce resources or factors of production that serve as
inputs are transported to the place where production takes place at the right time. Additionally,
the production process or service provision is not complete until transport has added the
necessary time and place utility to the outputs. Furthermore, the decrease in transport costs can
be used to transport inputs or outputs over longer distances, or to transport more inputs or
outputs at the same time.
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