01 Intro - Sys and Econ (Rev 5)

THE UNIVERSITY OF BRITISH COLUMBIA
Faculty of Applied Science, School of Engineering

Dr. Gordon R. Lovegrove, P.Eng. MBA, PhD
www.ubc.ca/okanagan/engineering
1137 Alumni Avenue Kelowna, BC, V1V 1V7
(250) 807-8717, gord.lovegrove@ubc.ca
WEEK 1
ENGR 335 - TRANSPORTATION ENGINEERING
1. INTRODUCTION - SYSTEMS, PROCESSES, ECONOMICS
(Mannering Chapter 1, with supplemental lecture materials)
OBJECTIVES
By the end of this unit, you will know:
1.. The course outline for ENGR 335, which generally describes the course schedule, core concepts and
analytical techniques, together with performance and attendance expectations. You must pass both the lab
and final exam components of this course.
2.. The definitions of transportation engineering and traffic engineering, and, the typical components that
comprise transportation systems in our communities.
3.. The processes by which transportation systems are governed, including processes that governments and
transport authorities use in decision making.
4.. The basics of transport economics, including the concepts of supply, demand, elasticity, road pricing, costs,
and benefits.
5.. Your group members, topic, and requirements to successfully complete your term project.
Welcome to the world of transportation engineering, and a whole new lexicon of language to grapple with,
while at the same time mastering the basic concepts and analytical techniques of transportation engineering!
To assist your learning, I have prepared this set of lectures notes for each topic in this course – Systems,
Economics, Planning, Safety, Flows, Intersections, and Highways. If time permits, we’ll also delve into
Neighbourhood Traffic Management (e.g. traffic calming). Pre-read in advance of each lecture if possible, as
we will be travelling fast. Please attend all lectures, work thru examples, and participate in discussions. Full
participation will translate to success in each of your labs, mid-term exam, term project, and final exam. You
are required to pass both the lab and final exam course components to pass the course – please speak
with me if you have any problems with this requirement.
UNIT GLOSSARY (From Mannering end of each chapter AND LECTURES)
Transportation Engineering (ITE, 1987): The application of technological and scientific principles to the
planning, functional design, operation, and management of facilities for any mode of transportation (land, sea,
air) in order to provide for the safe, rapid, comfortable, convenient, economical, and environmentally
compatible movement of people, goods and services.
Traffic Engineering: A branch of transportation engineering that deals with planning, geometric design, and
traffic operations of roads, streets, and highways, their networks, terminals, abutting lands, and relationships
with other modes of transportation.

ENGR 335: Transportation Engineering Page 2
Introduction – Systems, Processes, and Economics
Travel Modes or Mode Choice – The choice of how you travel between your origin and your destination.
Some common travel modes include: walk, bike, bus, drive, carpool, plane, train, boat, horse, etc.
Arterial Road – primary function is mobility – higher speed, through movements, primarily vehicles. Often
multiple lanes in each direction, with medians, carrying highest volumes. Higher speed versions are freeways.
In Kelowna, arterial roads include: Springfield, Gordon, Lakeshore, Rutland, McCurdy, and Clement Roads.
Local Road – primary function is access – lower speed, local movements, all modes. Usually 1 or 2 lanes total.
The road that provides direct driveway access to single family homes is usually a local, but not always.
Collector Road – transitional function between local and arterial roads. In Kelowna, collector roads include:
Ethel, Biggar, Cross, Glenmeadows, Gerstmar Road, etc.
Economics – The social science that studies the allocation of scarce resources to maximize efficiency of
production/consumption/disposal and the wealth of society.
Macro-Economics – Economics that focuses on national and international trends, comparisons, and measures,
including Gross Domestic Product (GDP).
Micro-Economics – Most of what engineers do falls into this category, which focuses on local markets, supply
curves, demand curves, and cost/quantity signals between buyers (consumers), and sellers (suppliers).
Total Revenue – Simply quantity bought multiplied by price paid. First derivative gives marginal revenue.
Marginal Revenue – The additional revenue received for producing one more unit, or, in transportation terms,
of providing one more parking space/bus ride/auto trip on a parkade/bus/highway, respectively.
Total Cost – Quantity produced multiplied by variable cost/unit, added to fixed costs.
Marginal Cost – The additional cost incurred for producing one more unit, or, in transportation terms, the
added cost to provide that one additional parking space/bus ride/auto trip. Or first derivative of total cost.
Externalities – Costs and benefits that are ‘external’ to, and thereby not perceived as part of, the
supplier/consumer transaction, such that they are typically paid by society. For example, air pollution and
congestion of adding more auto trips onto highways.
© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

Direct or Perceived Costs and Benefits – Those cost and benefits paid/received ‘directly’ by the consumer,
such as parking, gas, insurance, travel time, safety, mobility, convenience, road rage, peace of mind, purchase
price, insurance, etc.
1.! TRANSPORTATION SYSTEMS
Everything we do – live, work, play, shop, school – is impacted by the transportation systems that connect us
between our origins and destination. Although your text speaks mainly to highway or road-based transportation
systems, which account for over 90 % of passenger-kilometres and 40 % of truck-based freight ton-kilometres,
it acknowledges that there are other infrastructure and travel modes. As a whole, what we travel in and on, how
that travel is managed, and the purposes for which we travel comprise an interconnected transportation
‘system’, or, system of systems.
SYSTEMS EXAMPLE 1: Transportation System Mind Map – Our inter-connected transport systems.
Include the major components, including: land use, humans, environment, modes, linkages, governance,
vehicles, infrastructure, energy, land use, cities, goods, services, information, jobs. Ask yourself, what
considerations would need to be made if we were tasked with creating an adequate transportation system for all
of society?

To help us understand and analyze this complex transportation system, we classify it into major systems -
Highways, Rail, Air, Water, and continuous flow (e.g. conveyor belts) systems - with traits related to - ubiquity,
mobility, efficiency, supported modes, and, passenger and freight service capacity. In this course, our limited
time permits us to focus only on the highway system. Highways are ubiquitous, provide great mobility where
they exist, have the poorest safety records (highest risk travel), and support all modes (other than trains, planes
and boats!). On the other hand, trucks provide negligible passenger service capacity but great freight service
capacity. The highway or road system is comprised of links and nodes in transportation modelling terms, or, in
more common terms, of roads (links), and intersections (nodes), respectively. Roads may be further classified
into three main types of roads, including: arterial, collector, and local roads. The principle function of an arterial
road is to provide for through traffic, typically higher volumes, travelling at higher speeds for longer distances.
The principle function of a local road is to provide property access, with lower volumes of lower speed traffic
predominating. Collector Roads provide a transition zone between local and arterial roads. The table below
shows the typical distribution of road classes in an urban area.
Range! !!
!
Road! Travel!Volume! Centreline!
Classification! (%)! Miles!(%)!
Arterial( 75( 15(
Collector(( 5( 10(
Local( 20( 75(
Total( 100( 100(
EXAMPLE: Arterial versus Local Roads
Although 75% of centreline-miles that are built consist of local roads, local roads only carry 20% of travel
volume. Notice the converse is true of Arterial roads, which comprise 15% of built miles, but carry 75% of
travel volumes. Why is that?
Because local roads mainly only include trip origins and trip ends of individuals (i.e. access function), whereas
arterials provide many overlapping direct routes (desire lines) for city and region-wide trips of many people (i.e.
mobility function).

So how do we as engineers plan for and manage this complex system? We need to be all things to all people to
plan a safe, efficient, and effective system. But not all system users are the same, and therein lies the problem –
we need due process to decide between competing priorities.
2.! GOVERNANCE PROCESSES
As a professional engineer, you will conduct analyses, present your results, and wait on your decision-makers.
As a professional, your clear, concise, and unbiased reports will facilitate well-informed decisions, but they will
not always follow your recommendations, as many other factors are often involved. You must simply use the
best technique to do your part, then let go of the process, letting those in final authority decide what to do next.
What else is involved in the process of making a decision? Below is one process design (or process flow chart)
followed by the US Federal Highway Administration (FHWA, 1983).
Key Inputs
• Goals and Objectives
• Concerns of decision
makers and others
• Legal and administrative
requirements
Design and Impact Estimation Evaluation

refinement Decision Making
• Costs • Impact assessment
of
alternatives • System users • Equity (incidence of
• Environment impacts)
• Regional • Economic efficiency
economic activity • Adequacy of the range of
• Energy alternatives studied
• Land-use Patterns • Financial Feasibility
• Local areas • Legal and administrative
• Financial and feasibility
institutional • Sensitivity of findings to
uncertainties and value-
laden as assumptions

Once the Key Inputs phase is complete (top box), the process moves to Design and refinement of alternatives,
Impact Estimation, and Evaluation, before final debate and Decision making. In major projects, there is always
a “Base Case” or “Do Nothing” option. These days, as the need to promote more energy efficient and
sustainable transportation modes arises, building more roads is not the only option.
DECISION-MAKING PROCESSES – EXAMPLE 1: The table below provides an example of all the
alternatives considered, along with the major evaluation criteria used, to help a major city decide how to solve
its traffic congestion problems.
a. If you were the decision-maker, which alternative would you pick and why? (Who are your stakeholders?)
b. As a P.Eng., what is you ethical duty regarding people, the environment, and your paying client(s)?
Table of Multiple Account Evaluation (MAE)

Alternatives: score as (Bad = 1, Okay = 2, Good = 3)
Criteria Weights More Transit Do nothing TDM More Roads
Travel Time
Community
Air Quality
Noise
Road Safety
Cost (Const, OM)
Time to Build
Overall Score:
c. Do you have enough data? What more do you need to make a decision?
3.! TRANSPORTATION ECONOMICS
The primary technique used to evaluate transportation alternatives involves economic cost-benefit studies.
Economics is a social science that studies the allocation of scarce resources, using value-based considerations to
maximize the efficiency of production/consumption, and/or the wealth of society. Transport economics is an
important decision-aid for transportation engineers, because so much of the wealth and welfare of society
depends on well-built and reliable transportation systems. In the US, an average of 30 % of after-tax household
income is spent on transportation-related costs. Billions of dollars and millions of jobs are directly generated in
the transportation industry, with almost every other part of our economy dependent on a smoothly running
transportation system.
3.1 Demand, Supply, & Equilibrium
Transportation economics is a sub-set of micro - economics, because it primarily looks at local markets,
transport, and impacts. Some exceptions exist, including: international flights, shipping, and highways. As
such, we use micro-economic evaluation techniques to evaluate, model and forecast various transport
alternatives.
Quantity demanded, q or D: The (aggregate) demand function represents the quantity (e.g. # of trips)
demanded by a group of buyers (e.g. travellers) at different ‘perceived’ prices (e.g. travel time, travel cost).
Price perceived or paid, p: A change in ‘perceived’ price (cost) results in a change in demand (short run).
So what does demand depend on? Assuming a linear relationship between quantity demanded, q, and price
paid, p, it holds as shown in equation (1)
∝ &
q = α - βp or != − (1)
$ $
and graphically as shown in the figure below.
The demand (or supply) function can shift (long run change usually) if there are changes in its activity or
behavioural variables, as shown in the figure on the right. Some of those changes may involve, or be caused by
consumer confidence (e.g. election results, global economic meltdowns), cost of living increases (e.g. rising
energy costs), technology change (e.g. substitutes), and/or demographic trends (e.g. aging baby boomers).

Supply Function, S: The supply function represents the aggregate quantity (i.e. roads, bus seats, airline seats)
that producers (e.g. TransLink, BC Transit, Air Canada) are willing to provide (offer) at various prices (costs).
If and only if (iff) the demand & supply functions for a given transportation ‘good’ (facility) are known, then
the equilibrium point (price/quantity) can be forecast.
ECONOMICS EXAMPLE 1: Supply-Demand Equilibrium Forecast

Givens: The travel time on a stretch of highway lane connecting two activity centres has been observed to
follow the equation representing the supply function t = 15 + 0.02v, where t and v are measured in minutes and
vehicles per hour, respectively. The demand function for travel between them is v = 4000 – 120t.
Finds: NOTE: It is customary to plot cost ($ price or time) vertically, and quantity (# trips or speed) horizontal.
a). Sketch these two equations on the same graph and determine the equilibrium time and volume.
b). If the length of the highway lane is 20 miles, what is the average speed of vehicles traversing this length?

3.2 Elasticities - Sensitivity of Travel Demand to Price, Supply, Income
As with all models of the real world, the form (i.e. linear or non-linear) and parameters (i.e. coefficients and
exponents) of the demand and supply functions are subject to uncertainty in their estimates. Therefore,
sensitivity analyses are recommended to assess how sensitive a particular result is to changes in one or more
variables, in the short term (i.e. less than 1 year time frame). In economics, the term most commonly used is
elasticity of demand, as it relates to changes in price (i.e. price elasticity of demand), supply (i.e. supply
elasticity of demand), or income (i.e. income elasticity of demand). For this course, you will only be
responsible for understanding and knowing how to calculate the price elasticity of demand, ep, which is
defined as the percentage change in quantity of trips demanded, q, that accompanies a 1% change in price, p, at
a given price and quantity point, or, in mathematical form in equation (2) as.
(2)
Over small ranges, when before and after prices (Po, P1) and/or quantities (Qo, Q1) are known, these
differentials and elasticity calculation can be simplified using an Arc price elasticity equation (3), as:
(3)
Only for linear demand functions (we’ll stick with those in this course, just know there are non-linear out
there), we can derive an equation (4) for the demand elasticity of price by taking the derivative of equation (1),
q=α–βp (1)
which produces:
(4)
After substituting for p in equation (1) and collecting terms, we get equation (5) as:
∝
e( = 1-) Note: Only If it is Linear(5)
&

ECONOMICS EXAMPLE 2: Point Price Elasticity
Givens: An aggregate demand function is estimated as q = 200 – 10p, where q is number of trips made, and p is
the price per trip.
Finds: Calculate the price elasticity of demand where q = 0, 50, 100, 150, and 200 trips, and, plot
price/demand.
Types of Elasticity: Elastic demand occurs when elasticity < -1 (or |ep| > 1), meaning that the resulting
percentage change in demand will be greater than the initiating percentage change in price. Inelastic demand
occurs when 0 < |ep| < 1. Perfectly inelastic demand occurs at ep = 0. Perfectly elastic demand occurs at ep =
- ∞. Unit elasticity occurs at ep = - 1. Even with the slope constant, elasticity changes over the full q range –
therefore, it is critical to know the price/quantity point at which you are calculating elasticity.

If the Arc price elasticity of demand equation (3) is being used, be careful that the changes involved are small,
typically less than 10%. In many cases, however, we won’t know the demand function. If we don’t know the
function, we have no choice but to use the arc price elasticity.
ECONOMICS EXAMPLE 3: Arc Price Elasticity

When the Coquihalla Highway tolls ceased, average traffic volumes rose 15%. How would you calculate that
price elasticity, if volumes before that averaged 10,000 AADT? (Recall the average toll price was $10 for
auto’s.)
3.2.1 Factors affecting elasticities
Most research has shown that consumers buy more of certain goods as prices drop, and vice versa, (there are
exceptions), depending on several factors, as follows:
•. Income – if too much is spent on rising fuel costs, substitute goods might be sought (e.g. transit)
•. Industry fragmentation versus consolidation – How many different brands of the same good are there?
•. Substitutes – the price and availability
•. Need versus want – is the good a necessity or a luxury?
•. Advertising – consumers can be attracted to or from goods, communication is the key
Total revenue (TR) is equal to price (p) x quantity (q), so we can translate these various price elasticities into
impacts on total revenue. When demand is elastic, an increase in price will decrease total revenue, because the

percentage change in quantity demanded is greater than the % price increase. Conversely, when demand is
inelastic, an increase in price will increase total revenue.
3.3 Consumer Surplus
Consumer Surplus as a function of quantity demanded, CS (q), is a measure of the value made available to
consumers by the existence of a facility, good, or service. Mathematically, CS (q) equals the difference between
what consumers pay directly (i.e. at a given price per unit), and what some or all of them might be willing to
pay. In other words, some consumers are richer (and poorer) than others, so would still continue to purchase a
good, make a trip, or pay for a service at a higher price (while other consumers are excluded from doing so until
the price drops – termed latent demand). For example, a bus patron pays $2 per trip in Kelowna, but might be
willing to pay $3 for that same trip, so her CS = $1. In a sense the area beneath the demand curve, D, is an
indicator of the total utility, or total value to society, of a given good or service; consumer surplus then is the net
value to society, the area between the demand curve, D, and the price point, p. For transit systems, we often
target the maximization of consumer surplus (or value to society) as an important goal. In general,
transportation improvements can be evaluated in terms of their change in consumer surplus, or, in terms of their
net benefits to society (i.e. triangular area APoB below the demand curve and above the price line). Latent
demand is represented in the figure below by triangle BQo, and for our transit example, would represent un-met
demand for free transit, or, the additional benefit to society that could be made if bus service were free to riders.
Of course, the operator would need to consider his lost revenue before making that decision!
B D

ECONOMICS EXAMPLE 4: Consumer Surplus
Givens: A bus company with an existing fleet of one hundred buses of 40 seat capacity increases its fleet size
by 20% and reduces its fare of $1 to 90 cents per ride.
Assumptions: 1) The existing buses had a load factor of 90%. 2) It is anticipated that demand elasticity of
service improvements will result in a 95% load factor. (Load factor measures seat availability, with 1.0 meaning
every seat is occupied, and 1.2 meaning 20% are standees.) 3) All the buses in the fleet are being used during
the peak hours.
Finds:
i) Calculate the change in consumer surplus.
ii) Calculate the price elasticity of demand.
iii) Does the company lose money?
3.4 Perceived & Full Costs, Externalities & Profit
Direct (or price) of making a trip is what the person making that trip perceives – typically only direct costs of
their travel time, parking costs, gas, insurance, ownership, and maintenance costs (really, once they’ve paid
their annual insurance, most folks don’t even think about any of these other than their time and gas). But there
are other costs borne by the trip maker (indirect costs) and society (Ext), some of which can be quantified and
others that can’t be easily estimated, including:
i) Ext: delays to other motorists by having one more car on the road,

ii) Ext: pain and suffering due to road collisions,
iii) Ext: sickness due to air pollution induced respiratory ailments (e.g. asthma)
iv) Ind: increased road maintenance
v) Ext: environmental degradation – air, water, soils, game trail severance
vi) Ext: traffic noise impeding community quiet and residential sleep patterns
vii) Ext: community fragmentation due to busy roads impeding ped/bike connections
These are most often termed the indirect or external costs of making a trip, costs that others in society are
impacted by and/or pay. Road maintenance for example, is an indirect cost that is paid by the trip maker (and
others) via property and personal income taxes. Others are true externalities (‘public goods’ paid by society in
general, but no one in particular), for example, impacts on our environment that degrades our water and soil –
they build up over time and may only impact future generations – how do we put a price on these impacts?
While we cannot estimate the ‘full’ costs of trip making (i.e. direct, indirect, and externalities), we can estimate
a lot of them, which is a reasonable starting point. When we try to model reality, we usually follow a cost
equation of the following form:
(6)
where:
TC (q) is total costs as a function of quantity demanded (e.g. trips made),
FC is fixed costs, things like ownership and insurance costs; and,
VC (q) represents costs that vary according to quantity (q) consumed, such as maintenance and
fuel costs.
Two useful concepts for engineers to keep in mind:
1. The Law of Diminishing Returns states that while initially increases in the total cost of producing a good
(such as the total annual budget of providing Kelowna transit service) will be less than the proportionate
improvements in transit service, at some point that will diminish to the point that increases in total cost aren’t
warranted. This law is depicted graphically in the figure below (left).

2. The Law of Increasing Returns to Scale looks at average costs (depicted above right), and states that the
generated hours of transit service often likely increase at a faster rate than the increase in factors of production
(e.g. wages and buses), again up to a point – most often due to technological improvements and/or the effects of
specialization. Beyond some point the additional benefit (or revenue) derived from increasing one unit of
production, marginal revenue, will be outweighed by the additional cost of that unit, marginal cost.
Marginal cost, MC, of a good is the additional cost associated with the production of one single additional unit
of output. If the cost (or supply) function is known, this would be its first derivative.
Marginal revenue, MR, of a good is the additional revenue generated by the sale of one single additional unit of
output. If the revenue (or demand) function is known, this would be its first derivative.
Again thinking of transit, an example of this concept would be calculating the marginal cost of one additional
hour of transit service. Generally, firms will increase production of goods up to the point at which they
maximize profit, P (q), the net of revenues above costs, as shown in equation (7):
(7)
If we assume that our linear models of economic demand, supply, cost, and revenue apply (in this course we
will), we can calculate/forecast at what equilibrium production/price point this should occur using calculus. To
maximize profit, as with any function we analyze in engineering, we differentiate all terms with respect to the
quantity parameter, q, and then set the first derivative = 0, yielding equation (8):

(8)
This equation is saying that to maximize profit, firms need to set marginal cost, MC (q), equal to marginal
revenue, MR (q). This is an extremely useful concept for transportation engineers, especially when it comes to
road pricing (i.e. road tolls). In the next section, we will do an example of road tolls to illustrate.
3.4 Road Pricing, Congestion Pricing, Tolls & TDM
Ask any resident of most cities today what their # 1 pet peeve is and you’ll most often hear answers like
“Traffic”, “Congestion”, “All those traffic signals”, “Lack of signal coordination”, “Long line-ups at the
bridge”, etc. Transportation engineers and their political masters have generally four options for responding to
traffic congestion:
1) Do Nothing – not bad if you have reasonable alternatives, such as transit or other home-work locations;
suicidal career move if not; 2) Build more transportation infrastructure (e.g. roads, commuter rail, airports,
ferries) – traditional response, not sustainable economically with shrinking budgets and greying baby boomers
meaning shrinking work forces; 3) Land Use Patterns – rebuild our communities to reduce auto dependence –
walkable, dense, transit-oriented, mix use, shorter home-work trip distances, technology – a long term solution
that doesn’t address current needs; 4) Transportation Demand Management (TDM), aka Mobility
Management Strategies (MMSs) – strategies aimed at changing the mode, time, or amount of auto travel.
We’ll discuss the first three options in later parts of this course. The fourth, TDM, relies heavily on several
economic-related governance policy strategies for success, including:
a) Property taxes on sprawl – the further out you live from Downtown, the more you pay, you really don’t
perceive this once it’s paid annually though, so little impact other than on your initial home purchase decision;
b) Subsidies on public transit – we subsidize every dollar spent of Kelowna transit to the tune of 60 cents on
average (less on UBC routes); in other parts of the world, transit is a money maker – any ideas where?
_________________________. U-Pass is an excellent example of transit subsidies, but with students
subsidizing fellow students. UBCV U-Pass has seen transit use grow from under 20% to over 50%. Make sure
that you understand this concept. It will be on your mid-term exam.

c) Road and parking pricing – both road tolls and parking costs hit drivers each time they travel. Research has
shown them to be the most effective in influencing auto travel demand. Examples include: 1) the Coquihalla
Highway tolls, which just ended in Summer 2008; 2) UBCO parking permit fees – but these annual fees are
‘sunk’ costs that once paid, are forgotten and no longer considered when making your travel choices, so daily
parking charges are more effective; and, 3) the London Central Business District (CBD) road tolls that resulted
in an over 20% traffic decline in year 1.
The TDM congestion pricing (or road toll) problem relies on the concept of marginal cost pricing. In most
cases, we characterize the short-run travel cost – the direct perceived cost paid by drivers - as an average cost
function, AC. We characterise their actual or ‘full’ cost on the rest of society – the cost of having one more car
on the road – as a marginal cost, MC. Refer to the road pricing figure below. At un-congested traffic flows, the
average cost and marginal cost will be the same, as each additional car doesn’t significantly add to delays of
others. But at the start of congestion, L, these costs diverge. Left on its own, congestion will equilibrate at point
J, where the average cost and demand curves intercept, AC = DD, and a quantity of N trips are being made.
However, this is not maximizing the wealth (profit) of society, because it does not take into account all costs of
these trips. Therefore, through road pricing we could take into account the ‘full’ costs (i.e. costs to motorist,
others, and society in general), moving the cost per motorist up, moving the equilibrium point from J to F, and
reducing auto trips from N to M, the most efficient solution. To do this, we’d need to set the price of the road
toll, T, at the cost difference between MC and AC curves, or T = F – G in the figure below, in order to make the
total direct cost per trip C. Why would we do this? To maximize economic efficiency, or where MC = MR, the
maximum total benefit to society. What happens to the trips no longer made by auto (MN)?
Road Pricing Theory

ECONOMICS EXAMPLE 5: Road Pricing (Tolls)
Givens: The US Federal Highway Administration (FHA) has established the following relationships on a 10-
mile-long highway section between travel time in minutes, t, and the demand for travel in vehicles per hour, Q,
as:
3 6
*+, = 10[1 + 0.15 ] and Qac = 4000 – 100t
4555
Supply Function Demand Function
Finds: If the highway users value time at $5 per vehicle per hour, what should the congestion toll be on this
highway section?
Input: Q (veh/hr) tac Qac tmc Qmc = 4000 – 100tmc

1,000 10 mins

REFERENCES:
1.. Mannering, F.L. & Washburn, S.S. & Kilareski, W.P. (2009) Principles of Highway Engineering & Traffic
Analysis, 4e, John Wiley & Sons, Inc, USA.
2.. Khisty, C.J., & Lall, B.K. (2003). Transportation Engineering: An Introduction, 3rd Edition, Prentice Hall,
Upper Saddle River, NJ, USA.
3.. Newman, P. & Kenworthy, J. (1999) Sustainability & Cities: Overcoming Automobile Dependence, USA.
4.. Hawken, P. & Lovins, A. & Lovins, L.H. (2000) Natural Capitalism, Little, Brown & Company, NY, USA.
5.! Lovegrove, G. (2007) Road Safety Planning, VDM Dr. Mueller, Berlin, Germany.
6.! Button, Kenneth (1963) Transport Economics, England.

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THE UNIVERSITY OF BRITISH COLUMBIA

Faculty of Applied Science, School of Engineering

UNIT GLOSSARY (From Mannering end of each chapter AND LECTURES)

compatible movement of people, goods and services.

with other modes of transportation.

Ethel, Biggar, Cross, Glenmeadows, Gerstmar Road, etc.

production/consumption/disposal and the wealth of society.

including Gross Domestic Product (GDP).

of providing one more parking space/bus ride/auto trip on a parkade/bus/highway, respectively.

congestion of adding more auto trips onto highways.

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

price, insurance, etc.

1.! TRANSPORTATION SYSTEMS

‘system’, or, system of systems.

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

shows the typical distribution of road classes in an urban area.

EXAMPLE: Arterial versus Local Roads

travel volumes. Why is that?

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

we need due process to decide between competing priorities.

2.! GOVERNANCE PROCESSES

followed by the US Federal Highway Administration (FHWA, 1983).

Design and Impact Estimation Evaluation

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

Table of Multiple Account Evaluation (MAE)

3.! TRANSPORTATION ECONOMICS

paid, p, it holds as shown in equation (1)

and graphically as shown in the figure below.

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

the equilibrium point (price/quantity) can be forecast.

ECONOMICS EXAMPLE 1: Supply-Demand Equilibrium Forecast

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

function, we have no choice but to use the arc price elasticity.

ECONOMICS EXAMPLE 3: Arc Price Elasticity

3.2.1 Factors affecting elasticities

exceptions), depending on several factors, as follows:

•. Substitutes – the price and availability

•. Need versus want – is the good a necessity or a luxury?

•. Advertising – consumers can be attracted to or from goods, communication is the key

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

inelastic, an increase in price will increase total revenue.

3.3 Consumer Surplus

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

ii) Calculate the price elasticity of demand.

iii) Does the company lose money?

3.4 Perceived & Full Costs, Externalities & Profit

others that can’t be easily estimated, including:

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

iv) Ind: increased road maintenance

v) Ext: environmental degradation – air, water, soils, game trail severance

equation of the following form:

TC (q) is total costs as a function of quantity demanded (e.g. trips made),

FC is fixed costs, things like ownership and insurance costs; and,

Two useful concepts for engineers to keep in mind:

warranted. This law is depicted graphically in the figure below (left).

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717

3.4 Road Pricing, Congestion Pricing, Tolls & TDM

economic-related governance policy strategies for success, including:

_________________________. U-Pass is an excellent example of transit subsidies, but with students

that you understand this concept. It will be on your mid-term exam.

© 2018 Dr. Gord Lovegrove, P.Eng. MBA, PhD, gord.lovegrove@ubc.ca, 250-807-8717