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Chapter 11: Q. 32 (page 273)

Why are urban areas willing to subsidize urban

transit systems? Does the argument for subsidies make sense to you?

Short Answer

Expert verified

The majority of visitors are from the low- and middle-income groups.

Step by step solution

01

Step 1. Introduction

Subsidy: Government financial assistance.

02

Step 2. Explanation

All utility services, such as road, rail, power, and transportation, are normally regulated by the government. The majority of the population works and travels in urban regions, which offer all of the amenities. The folks are not all from the same socioeconomic bracket. Some people couldn't afford transportation, yet they needed to relocate for their jobs. The government is assisting them by providing basic transportation services. Only operating expenditures, not fixed costs, are paid by the ticket price. Those who desire more services can pay for them and take advantage of the benefits.

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