Deakin Parking Economics Assignment Help
Deakin Parking Economics Assignment Help expected return for an hour’s work for the Parking Inspector will be-
Return = Average number of fines per hour * Fine amount
Return = 0.7 * $75 = $ 52.5
The marginal cost of another hour’s parking check is the wage of Parking Inspector per hour.
The marginal revenue will be the return per hour of parking check.
Thus MR = $ 52.5
For maximizing the revenue, MC = MR. (Frank 2008, pp.150-152)
In this case since the MC is less than MR, the frequency of the parking check can be increased, till MC becomes equal to MR.
A scenario where the probability of being fined in absence of having a permit is 100 % , will have good consequences for the university. This is because it will be increase revenue of university through sale of permit to park the car. This will also help towards reducing the cases of parking without permit. But this will also reduce the universities revenue from fines.
A scenario where the probability of being fined in absence of having a permit is 0 % , will have bad consequences for the university. This is because it will not only reduce the fines which the university accrues from parking without permit but also encourage the people not to take permit as they can get their car parked without any fines. Thus it will reduce the revenue from the sale of permit also.
dAssuming the parking fine is $50 (as there is no clear definition of fine imposed)
Student pays daily parking fees ($6). Since the student came to university for 96 days, the cost of parking permit for daily parking will be-
Cost = 96 * $6 = $576
Student takes a Trimester Permit ($250). The cost for the student will be $250.
Student doesn’t buy the daily permit or trimester permit. He will have to pay cost based on the probability of being fined (7.5%)
The cost for the user will be-
Cost = 96 * $50 * 0.075 = $360
Thus the student will prefer to buy trimester permit as it will cost him the lowest of all the three options.
The illustrations of the demand supply of the two markets and the revenue pattern on these two markets are also shown below. In these examples, D1 shows the demand curve while S1 shows the supply curve before restrictions and S2 shows supply curve after restrictions. In this case it is assumed that the permits have been reduced and restricted to Q2. The revenue curve is also shown for both the cases. It can be seen that the equilibrium of Q1, P1 shifts to Q2, P2 after the restriction on supply of permits is imposed. The revenue also moves from R1 to R2.
Deakin Parking Permit Market
It can be seen that when restrictions on parking permit is imposed the revenue moves from R1 to R2 which means increase in revenue.
Local Council Parking Permit Market
It can be seen that when restrictions on parking permit is imposed the revenue moves from R1 to R2 which means decrease in revenue.
Restricting the number of parking permits has different effects on the revenue of the two markets. This can be seen from the diagrams above where for Deakin it increased while for Local Council it reduced. This is due to the fact that the intersection point of the supply curve and demand for the Deakin was on declining revenue curve while intersection point of the supply curve and demand for the Local Council was on increasing revenue curve. In other words, Deakin has provided more permits than the point of maximum revenue while Local Council has provided few permits than the point of maximum revenue. The present situation for Deakin means that marginal cost is more than marginal revenue, while for Local Council it means that marginal revenue is more than marginal cost. (Wall & Griffiths 2008, pp.
The Supply Demand curve for such a situation will look like below. Earlier the supply of parking area was Q1 but it reduces to Q2 due to areas lost in building work. In such a situation ideally the price must move to P2. But as the price has been not allowed to change, it will cause a severe mismatch in the demand and supply of the parking areas. This situation will lead to quantity demanded to remain equal to Q1 but the supply will be reduced to Q2. Thus there will be a shortage equal to Q1-Q2 in the market.
Deakin Parking Economics Assignment Help
All people who want spot in parking will not be getting spots to park their vehicle in such a case as explained above it will lead to a situation on shortage of parking area. The shortage will be Q1-Q2. Price will not be a significant factor on who gets the spot as there are more consumers who are willing to buy the parking spots than is currently available. Other factors which will determine who gets parking spot will be the sequence in which the applicants apply for parking spot or outside ideal market conditions like contacts with people responsible for allocating parking spot.
A situation where the parking supply has been reduced and also cheaper public transport becomes available, it will lead to following situation. The supply will move from Q1 to Q2 and the demand curve will move from D1 to D2 as the demand for parking will be reduced due to cheaper public transport. This will lead to price of parking permit to move from P1 to P2. This will mean that it will lead to reduced price of parking permit as is depicted in the diagram below.
In other universities it is generally seen that the parking zones which are closer are priced higher while the parking zones which are farther are priced less. This is a better way of allocating quantity to the consumers. This is because this is similar to differential pricing where the need of and the capacity to pay of the consumer determines who gets parking closer to university (Case & Fair 1999, pp.110-120). For example a person to whom the higher price of parking doesn’t matter much, they will be willing to pay higher price while price conscious consumers will be more inclined towards parking zone which is farther since it is at more distance than premium parking zone. This is different from the pricing system (single pricing) which is present in the Deakin University for White spaces as the parking fees is same whether it is for white spaces or other parking zones. This leads to daily competition from staffs and employees for the white spaces. This situation can be reduced if differential pricing for closer and farther parking zones is introduced.
As the extra fees of $10 was introduced to the vehicles that are looking for parking fees during the peak time, the supply curve of the market shifts from S1 to S2. This can be seen in the diagram below which depicts the market scenarios before and after imposing the fees of $10. The vertical distance between the two curves will also be $10.
This leads to equilibrium point to move from Q1,P1 to Q2,P2. In other words, the volume of personal transport reduces from Q1 to Q2. Also the effective price for consumers of private transport increases from P1 to P2. This led to the desired effect of discouraging people to use their personal vehicles for commutation as the effective price for them to use personal vehicles increases. Congestion parking like above case can also be observed to be implemented in Deakin. For example, the university has restrictions for the use of General Parking Area between 8:30 AM to 4:30 PM for Monday to Friday that the person must have a valid parking permit. All the other parking zones also have a restriction of person must be having the parking permit. This helps regulate the congestion, demand of parking space during the peak time mentioned above and the demand of premium parking space.
- Case, K & Fair, R 1999, Principles of Economics (5th ed.). Prentice-Hall, pp. 110-120
- Wall, S & Griffiths, A 2008, Economics for Business and Management, Financial Times Prentice Hall, pp. 150-152
- Frank, R 2008, Microeconomics and Behavior (7th ed.), McGraw-Hill, pp. 82-86