Transportation economics involves the various transport costs involved in the movement of products and assets to a place where they are accessible to consumers. In the logistics process, there are various costs incurred in various travel units, including the average and marginal cost. All these costs are essential for the smooth operation of transportation.
The average cost refers to the total costs incurred in the movement of assets divided by the number of trips made in the entire transportation process (Litman, 2021). In logistics companies where there are long-run costs, there are no fixed costs. This implies that the average cost is likely to decrease as the total productivity increases until full capacity is realized. When the total productivity decreases, the average cost increases. Usually, the graphical presentation of an average cost is U-shaped due to the above explanations.
Delegate your assignment to our experts and they will do the rest.
Marginal cost refers to the change in the total product that is realized from the addition of an extra unit of the variable factor into production. Marginal cost is the particular variable related to the provision of a service or in the use of infrastructure (Mohassel, 2017). There are short-run and long-run marginal costs. The former is any operational and maintenance costs associated with the marginal increase in output without increasing physical activity. On the other hand, long-run marginal costs are inclusive of capital costs that increase capacity and output.
Unit travel in transportation economics is also referred to as the unit of transportation measurement. The term refers to measuring the quantity and traffic of transport that has numerous uses in the logistics companies (Borsky & Unterberger, n.d.). For example, the unit of travel is used in statistics and planning in various transportation companies.
References
Borsky, S., & Unterberger, C. Economics of Transportation.
Litman, T. (2021). Transportation Economics Simplified.
Mohassel, A. (2017). Essays on Transportation Economics (Doctoral dissertation, The University of Arizona).
