• April 20th, 2016

Government Intervention

Paper, Order, or Assignment Requirements

Word Limit:1300 Words

Marking: Marks will be awarded based on how well you: (a) understand the economic concepts from the lectures; (b) apply the concepts to the questions; (c) conduct systematic economic analysis using the concepts (this includes the use of appropriate graphs and diagrams); (d) engage in critical discussion; and (e) draw conclusions. Note that general layman discussions (for example, broad-brushed, journalistic information from the media) do not constitute sufficient economic analysis. Presentation: Assignments should be typed, using 10 – 12 sized font and 1.5 – 2 line spacing. Graphs and diagrams can be hand drawn and scanned in, but must be clearly drawn and clearly labelled.

Read the news article Radical road charges urged to fight Australia’s traffic troubles (news.com.au 23/10/15) attached, about proposed traffic congestion charges on Australian public roads.

Then use economic analysis to answer the following questions. In your answers, ensure that you use relevant economic concepts and diagrams covered in this course. Note that general layman or journalistic discussions do not constitute sufficient economic analysis.


Question 1: Reasons for government intervention The imposition of congestion charges on motorists is a form of government intervention into the issue of traffic congestion on busy public roads. With reference to economic theory covered in this course, why do you think the government needs to intervene in this issue?

(8 marks)

Question 2: Public policy solutions (a) Perform an economic analysis of congestion charges as a public policy instrument. (In your answer, consider: what sort of public policy instrument is a congestion charge? How does it work in economic terms?) (6 marks)

(b) What other public policy instruments can the government employ to combat traffic congestion on busy public roads, and how do these differ from congestion charges?

(6 marks)

Question 3: Efficiency of public policy solutions (a) Based on your analysis in Question 2(a) above, how should congestion charges be set in order for congestion problems to be corrected in a way that maximises the overall welfare of society? Explain. (4 marks)

(b) Do you think that the government will be successful in employing congestion charges to correct congestion problems and restore efficiency? Why or why not? (6 marks)

Question 4: Private solutions How can each of us as private individuals contribute to the reduction of traffic congestion in the absence of government intervention? Are such private solutions likely to be effective?

(5 marks)

Radical road charges urged to fight Australia’s traffic troubles OCTOBER 23, 2015

Benedict Brook news.com.au

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