Transport Economics: Checkpoint 1

Quick checkpoint - five questions on transport costs, road funding, railways, airlines and the cost of a car.

Question 1 of 5 What happened when districts in colonial India were connected to the railway network?

Trade costs rose and incomes fell Trade costs fell, price gaps between regions narrowed and agricultural incomes rose Nothing changed Farming stopped entirely

Dave Donaldson's research found large gains from railway connections.

Question 2 of 5 Why are electric vehicles a challenge for road funding?

They damage roads far more than other cars They use roads but pay no fuel tax They cannot use toll roads They are banned from highways

As electric cars spread, fuel tax revenue shrinks, pushing governments toward new fees.

Question 3 of 5 What is a cross-subsidy in Indian Railways?

Using freight profits to keep passenger fares low Charging passengers more than freight Selling railways to private companies Borrowing from foreign banks

High freight charges support cheap passenger fares, but can push some freight onto roads.

Question 4 of 5 Why do airlines vary prices so much for the same flight?

Because of random errors To fill seats by charging more to travellers who need to fly at short notice and less to price-sensitive ones Because the law requires it Because fuel costs differ for each seat

This practice is called yield management.

Question 5 of 5 What is usually the single biggest cost of owning a new car?

Tyres Tolls Depreciation Car washes

New cars lose a large share of their value in the first few years.

← Back to The True Cost of Owning a Car Next lesson → The Economics of Ride-Hailing

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