An economical reason and a political reason for which mass transit systems are heavily subsidized. Concept introduction: Subsidy: Subsidy is a form of compensation given to economically backward people, either to a consumer or a producer, in order to bring them up at the same level as the main stream of the economy. It can be in the form of direct cash, compensation, and so on. Explanation: The economic reason for which all the mass transit systems in the U.S. are subsidized by the tax payers lies in the fact that the major proportion of taxpaying people use transit systems. As they do not have their own vehicles and even if they have it, they do not use it for long journeys. So, it is very much essential for the government to subsidize the operation of the mass transit systems. Most of the people in U.S. use public transport so, it is the vote bank of the government. If the government does not provide subsidy, then the people might get offended and won’t vote for the government. As a result, the government is bound by the political reason to provide subsidy to mass transit.

Question

Want to see the full answer?

Answer 1

Question

Chapter 18, Problem 5DQ

To determine

An economical reason and a political reason for which mass transit systems are heavily subsidized.

Concept introduction:

Subsidy:

Subsidy is a form of compensation given to economically backward people, either to a consumer or a producer, in order to bring them up at the same level as the main stream of the economy. It can be in the form of direct cash, compensation, and so on.

Explanation:

The economic reason for which all the mass transit systems in the U.S. are subsidized by the tax payers lies in the fact that the major proportion of taxpaying people use transit systems. As they do not have their own vehicles and even if they have it, they do not use it for long journeys. So, it is very much essential for the government to subsidize the operation of the mass transit systems.

Most of the people in U.S. use public transport so, it is the vote bank of the government. If the government does not provide subsidy, then the people might get offended and won’t vote for the government. As a result, the government is bound by the political reason to provide subsidy to mass transit.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

(d) Calculate the total change in qı. Total change: 007 (sp) S to vlijnsi (e) B₁ is our original budget constraint and B2 is our new budget constraint after the price of good 1 (p1) increased. Decompose the change in qı (that occurred from the increase in p₁) into the income and substitution effects. It is okay to estimate as needed via visual inspection. Add any necessary information to the graph to support your 03 answer. Substitution Effect: Income Effect:

everything is in image (8 and 10) there are two images each separate questions

everything is in the picture (13) the first blank has the options (an equilibrium or a surplus) the second blank has the options (a surplus or a shortage)