In the above chart, the Y-axis represents the cost while the X-axis represents the traffic. In, Transportation economics the demand and supply curve tend to behave the same as a normal demand and supply curve. When the costs increases, the number of customers who are willing to pay for transportation services decreases. When the costs decrease, the number of people willing to travel and pay for transportation costs increases (Khisty, & Lall, 2017). The above demand curve shows this concept. This condition is only satisfied when other transportation factors are held constant.
For the supply curve, the curve behaves differently because when the cost prices of transport increase, many transport providers are willing to offer high quantities of transportation services because they are most likely to make high profits. When the transportation costs are low, few service providers would be willing to offer their services because little benefits are involved In the above chart, the Y-axis represents the cost while the X-axis represents the traffic. In, Transportation economics the demand and supply curve tend to behave the same (Vasigh, & Fleming, 2016). Again, all other factors are held constant.
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The equilibrium point is a natural point that shows the willingness of customers to pay for what the service providers are offering. Elasticity shows the different variations of demand that is caused by price differences.
References
Khisty, C. J., & Lall, B. K. (2017). Transportation engineering . Pearson Education India.
Vasigh, B., & Fleming, K. (2016). Introduction to air transport economics: from theory to applications . Routledge.
