Key terms in the transport market

1. Externalities: These occur when a third party is affected by the decisions and actions of others.

2. Social benefit: is the total benefit to society =

3. Private Marginal Benefit (PMB) + External Marginal Benefit (XMB)

4. Social Cost: is the total cost to society =

5. Private Marginal Cost (PMC) + External Marginal Cost (XMC

6. Social Efficiency: This occurs when resources are utilised in the most efficient way. This will occur at an output where social marginal cost (SMC) = Social Marginal Benefit. (SMB)

7. Congestion: Traffic congestion is a condition on road networks that occurs as use increases, and is characterized by slower speeds, longer trip times, and increased vehicular queueing. The most common example is the physical use of roads by vehicles.