TRL2602
ASSIGNMENT 2
SEMESTER 2 2026
UNIQUE NO:
DUE DATE:
,TRANSPORT ECONOMICS - TRL2602
OCTOBER /NOVEMBER 2026
SECTION A
QUESTION 1
1.1 Using examples, explain how increasing petrol prices affect the local
economy. (5)
An increase in petrol prices has several effects on the local economy because petrol is
an important input into the transportation of people and goods.
1. Higher transport costs: Taxi operators, bus companies, delivery services and
private motorists face higher operating costs. These costs may be transferred to
passengers through higher fares.
2. Higher prices of goods: Businesses that transport food, clothing and other
products to shops incur higher distribution costs. Retailers may therefore
increase prices to maintain their profit margins.
3. Reduced household disposable income: When households spend more on
fuel and transport, they have less money available for other goods and services
such as entertainment, clothing and household items.
4. Reduced business activity: Small businesses may experience declining sales
because consumers have less disposable income. Businesses that depend
heavily on transport may also reduce production or employment.
5. Changes in travel behaviour: Consumers may respond by using public
transport, travelling less frequently, sharing vehicles or choosing destinations
closer to home. For example, a commuter may reduce unnecessary car trips
because of the increased cost of petrol.
ASSIGNMENT 2
SEMESTER 2 2026
UNIQUE NO:
DUE DATE:
,TRANSPORT ECONOMICS - TRL2602
OCTOBER /NOVEMBER 2026
SECTION A
QUESTION 1
1.1 Using examples, explain how increasing petrol prices affect the local
economy. (5)
An increase in petrol prices has several effects on the local economy because petrol is
an important input into the transportation of people and goods.
1. Higher transport costs: Taxi operators, bus companies, delivery services and
private motorists face higher operating costs. These costs may be transferred to
passengers through higher fares.
2. Higher prices of goods: Businesses that transport food, clothing and other
products to shops incur higher distribution costs. Retailers may therefore
increase prices to maintain their profit margins.
3. Reduced household disposable income: When households spend more on
fuel and transport, they have less money available for other goods and services
such as entertainment, clothing and household items.
4. Reduced business activity: Small businesses may experience declining sales
because consumers have less disposable income. Businesses that depend
heavily on transport may also reduce production or employment.
5. Changes in travel behaviour: Consumers may respond by using public
transport, travelling less frequently, sharing vehicles or choosing destinations
closer to home. For example, a commuter may reduce unnecessary car trips
because of the increased cost of petrol.
