My second case study is regarding “Does Public Urban Transport Substitute the Car” which this article is written by RocíoRomán on September 25th of 2012. This article focuses on how people should use public transport instead of using automobiles. Firstly, substitute goods are goods that can be used to replace the other goods. It is also known as goods for which an increase in demand for goods leads to a fall in demand for the other goods, or vice versa. Basically this means that when a demand of one increase, the other good experiences a fall of demand. We can take air-conditioner and fan as example of this study case. For instance, if the price of an air-conditioner goes up, the quantity of fans demanded will increase and vice versa. Therefore based on this article, the subjects of this case are public transportations and personal cars.
In my own personal opinion, I do agree that the public transport can substitute the usage of cars. Driving a personal car has more disadvantages than advantages. For example, if everyone in this country drives their own car, the quantity of vehicles on the roads would increase dramatically. This situation will cause the traffic to be congested at all times especially during the peak hours and we will have to spend more time on the road rather than spending time at our destinations. Higher quantity of vehicles on the road will also cause the rate of air pollution to increase and it will cause the people to suffer from heart and lungs diseases. Other than that, the prices of a car are expensive and not every family can afford it.
Prices in most markets are free to rise and fall to their equilibrium levels, no matter how high or low those prices can be. However, government may not satisfy with the market prices set by the supplier, so government may place a legal limit on how high or low a price may go. Somehow, it may not be a good idea, because when the government sets a maximum legal price a seller may charge for a product or service, shortage may occurs although government intention is to make sure everyone is allocated the same amount of goods and services.
The factors that may affect the demand of public transportation are expected future prices of cars, current income of consumers, expected future income and credit of consumers, the population, and prices of related goods. Firstly, if the expected future price of a car rises, consumers will use public transportation in the future or if the future prices of petrol increase, consumers will tend to avoid purchasing a car. Next, if the consumers’ income is not sufficient, then they will tend to use public transportation instead of buying a car. Moreover, when consumers expected future income increases or when credit is easy to obtain, the demand of cars might increase now however if the consumers find that using public transportation is more efficient and effective, they will continue on using the public transport. It actually depends on the consumer’s priorities. In addition, the larger the population, the greater is the demand for all goods. This also includes the demand of public transportation. Lastly, the price of related goods also affects the demand for public transportation. This is because a substitute is a good that can be used in place of another good for example cars and public transportation. Therefore, when the price of car rises or when the price of a complement of a car rises which is petrol, then the demand for the substitute of a car which is public transportation will increase.
The main factors that change supply of a car are the prices of factors of production, the prices of related goods produced, expected future prices and technology. The first factor is the prices of factors of production used to produce a good rises, the minimum price that a supplier is willing to accept for producing each quantity of that good rises so a rise in the price of a factor of production decreases supply and shifts the supply curve leftward. Other than that, expected future prices of a car rises, the supply of the car today decrease and the supply curve shifts leftward. Moreover, the number of suppliers is also one of the factors. The larger the number of suppliers of a car, the greater is the supply of the car. An increase in the number of suppliers shifts the supply curve rightward. Technology, the advances in technology create new products and lower the cost of producing existing products. So advances in technology increase supply and shift the supply curve rightward.
In conclusion, I personally think that public transportations can definitely substitute the usage of cars as they have much more advantages than the disadvantages. Some of the advantages are reducing the traffic jam, as Kuala Lumpur always facing traffic conjunction, which produce air and sound pollution. Consumers also can save their money for filling petrol and government also can reduce cost to build new roads but increase more public transport. In my opinion, these can also affect the demand and supply.
Siti Zulaika
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