1.Explain how markets and governments can deal with a lack of rail competition (for example, in Canada where there are two railways serving most urban centres)?

2.Setting prices equal to marginal cost is necessary to achieve allocative efficiency. This result is obtained in highly competitive markets, but in some cases where natural monopolies or other market failures exist, the government must use regulatory powers to set prices.

a)Draw and explain an appropriate model(s) that illustrates the problems with implementing marginal cost pricing for a regulated inter-city bus company that provides transportation services between cities not served by other 'passenger pay' modes (i.e. rail, air and taxi).

b)Explain and illustrate two alternatives to marginal cost pricing that the government regulator could consider.

3.Which of the following diagrams explains the impact of a productivity reduction in transportation logistics due to new health regulations? Explain what is happening and why in the diagram you pick. (SEE PICTURE ATTACHED)