Question

A recent study shows the benefits of using public transportation. Government officials have hired your consulting firm to increase the demand for public transportation. They come to you with three of their suggestions.

• Suggestion 1. Reduce the price of public transportation.
• Suggestion 2. Increase the price of private transportation by increasing tolls.
• Suggestion 3. Offer monthly and yearly passes that reduce the price paid per ride of public transportation.
Which suggestion(s) does your firm recommend?
A. 1
B. 2
C. 3
D. 1 and 3

Answer 1

C. 3

Step-by-step explanation:

The decision to use public or private transport is individual and depends on the tastes and preferences of each consumer. If there is a proposal to stimulate the use of public transport, it is necessary to affect these preferences, which are often associated with costs.

Measure 1 would only be feasible if a study showed that there is room for tariff reduction. Public transport should be used, but it should be sustainable without relying on subsidies.

Measure 2 may be adopted, as rising private transportation costs such as tolls, fares and so on may force people to decide to use public transport, but this is a more extreme measure that affects other sectors and I would not recommend it.

Measure 3 would be recommended because it is a stimulus to the consumption of public transport. If annual passes provide discounts, consumers' perceptions may change as public transport may become more economically attractive.