Transport economics Why is transport important?
Classifying private costs
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Classifying private costs Private costs can be subdivided into; Fixed costs, Variable costs and terminal costs. Fixed costs - Paid in the short run in transport these usually consist of the costs of making transport vehicles available for use. In the case of railways and airports there are also capital costs such as track and airports. Variable costs - these depend directly on how the transport vehicles are used and the level of service available. Terminal costs - Costs at the end of journeys or service or when passengers or more usually freight moves from one mode of transport to another or move vehicles. Usually accounted for in fixed costs as far as firms are concerned. The table below shows the main costs for each mode of transport. 
The ability to identify and allocate costs between these categories has assumed a new significance since the privatisation process began in the UK. Companies wishing to bid to run bus or train services have to be able to find ways of controlling and reducing costs if they are to be successful. Failure to manage costs properly or failing to understand the breakdown of costs may lead to lost franchises or losses. Marginal costs are usually the most difficult to measure. Marginal costs are by definition made up of variable costs, as output (miles traveled or passengers carried) rises then so do variable costs. The marginal cost of transport is the addition to total costs of the extra mile traveled or the extra passenger carried or the extra tonne of freight carried. (The best way to measure this would be tonne km or passenger km.) The problem is that as there are external costs involved measuring marginal costs is difficult. For example every extra road user imposes a cost on all other users because their journey takes a little longer (lost time) and leads to extra private costs (more fuel). Directory: files -> quia -> users users -> L y aura un quiz sur le vocabulaire users -> 007. Explain and demonstrate basic cad commands and techniques users -> Vocabulary review users -> Three Approaches to Defining Jazz Mark Gridley, Robert Maxham and Robert Hoff Copyright 1989 by Oxford University Press users -> Inventions and Inventors Web Quest Introduction users -> How do we handle these contacts? users -> A brief History of the Personal Computer users -> Lecture #13 the civil war from The Election of Lincoln to the Surrender at Appomattox Election of 1860 users -> Hours: 05 Term: Winter/Spring 2005 Days users -> Ch. 1 Thinking Geographically Download 4.92 Mb. Share with your friends:
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