Corporate Printing Solutions

Here is an example of how the economy works. The subway in the capital of Euroland is weak. Some people think not survive without government subsidies. Some others think that if managed differently, may be self-sufficient. He asked his advice as a consultant to determine a level of rates to obtain the highest possible income. How do you analyze the problem?

To organize the reasoning, or, as economists define it, build an economic model, it requires a simplified view of reality that reveals the most important elements of the problem. A simple equation can help to get started:

Income = tariff x number of passengers

The equation emphasizes and organizes the reasoning on two factors: the rate and number of passengers. The metropolitan transport agency directly controls the rate, but can only influence the number of passengers through the fare you choose. Read the rest of this entry »