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Home Price and Output Determination Under Perfect Competition Fixation of Railway Rates

 

Fixation of Railway Rates:                                                    

 

The railway freights are fixed on the principle of "What that traffic wilt bear". By the phrase "what the traffic will bear" is meant the fixation of railway rates according to the freight bearing capacity of each service performed by the railway.

 

Railways, for instance, carry different classes of passengers and different kinds of goods. The paying of each capacity passenger is different. A rich passenger can afford to pay higher fare than the poor. Similar is the case with the other commodities. Some commodities are highly valued and others are low priced. A highly priced commodity can stand a higher charge than a low priced commodity.

 

For instance, railways carry gold as well as coal. The gold is highly valued and the coal is very low priced. If a uniform rate carrying all kind of goods and for ail classes of passengers is fixed, it may not be possible to cover the total cost. The railway acts on the principle of what the traffic can bear. It charges different rates according to the freight-tearing capacity of each service of good and thus maximizes its profits.

Relevant Articles:

Market Structure
Perfect Competition
Equilibrium of the Firm
Short Run Equilibrium of the Price Taker Firm
Short Run Supply Curve of a Price Taker Firm
Short Run Supply Curve of the Industry
Long Run Equilibrium of the Price Taker Firm
Long Run Supply Curve For the Industry
Price Determination Under Perfect Competition
Market Price
Determination of Short Run Normal Price
Long Run Normal Price and the Adjustment of Market Price to the Long Run Normal Price
Distinction/Difference Between Market Price and Normal Price
Interdependent Prices
Joint Supply
Fixation of Railway Rates

Composite or Rival Demand

 

Principles and Theories of Micro Economics
Definition and Explanation of Economics
Theory of Consumer Behavior
Indifference Curve Analysis of Consumer's Equilibrium
Theory of Demand
Theory of Supply
Elasticity of Demand
Elasticity of Supply
Equilibrium of Demand and Supply
Economic Resources
Scale of Production
Laws of Returns
Production Function
Cost Analysis
Various Revenue Concepts
Price and output Determination Under Perfect Competition
Price and Output Determination Under Monopoly
Price and Output Determination Under Monopolistic/Imperfect Competition
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Rent
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Principles and Theories of Macro Economics
National Income and Its Measurement
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Fiscal Policy
Determinants of the Level of National Income and Employment
Determination of National Income
Theories of Employment
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Balance of Payments
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Development and Planning Economics
Introduction to Development Economics
Features of Developing Countries
Economic Development and Economic Growth
Theories of Under Development
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Agriculture and Economic Development
Monetary Economics and Public Finance

History of Money
 

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