Micro econs (1) Essay

Microecons ProjectBrainstorming ideas:(A) IntroductionEver since 2008, the demand for motor vehicles such as cars and motorcycles have been steadily increasing until 2013 when the Singapore economy experienced a crisis and has been decreasing ever since except for 2016 where there was a slight increase before gradually decreasing. (The above data shows how many vehicles were purchased in Singapore from 2008 to 2018) According to statistics, Singapore is currently leading South East Asian vehicle market which has the highest sales growth in the new few years since older cars get de-registered and have to be replaced COE at the end of 10-years.

Singapore car sales set to jump 20% in two years: the highest rise in Asean Straits Times 3 June. 2015, late ed.: 1-2.-19049161925 The BMI Research found that the annual average growth rate will have an expected increase in 20 percent sales as this was caused by the seven years of decline from 2007 to 2013. This growth rate will continue to rise an extra 10% annually between 2015 to 2019. Thus, this clearly shows that vehicle demand is seemingly expected to increase in the upcoming years.

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However since the supply side has fixed at a specific quota with the adoption of zero-growth rate for the COEs, there will be a higher price on COE which can indicate that there will be a lower demand for motor vehicles. The reason why people want to own a car or motorbike is for convenience sake which they are able to travel easier and faster from one point to another point.Based on the law of demand, it tells us that as the price of a vehicle increases, the quantity demanded would decrease as well.OverviewOur overview of the discussion report is to find out ways of solutions/policies to help the government to reduce the demand of motor vehicles in Singapore by examining a few best solutions that the government can take into consideration or action and in that process persuade people to take other modes of transport.(B) Ideate Section: Solution 1: Targeting customers who owns carWhat can government do is to decrease Bus and MRT fare for those who own a vehicle in order to attract customers who own car so they will naturally think of taking public transport since it will be at a cheaper rate than the others who do not own a car. If a customer consistently takes public transport for a month, EZ-Link could even offer a day free transport to reward them for not driving their car and this ultimately convinces people to use their petrol and car maintenance expenses on public transport. In order to benefit every customer, for those people who do not own a car, the government can offer promotion like 30% discount trip for up to 3 days every month as this is to complement the incentive which is to reduce MRT and bus fare for those with a vehicle. Solution 2: EZ-Link implementing points reward systemEZ-Link can implement a points reward system to claim vouchers/discounts. This works in a way where if customers take more and more trips using public transport, they will earn points and this would qualify them to redeem a free item from a shop of their choice. As they collect more and more points, they would qualify to redeem more favorable and luxurious items and this would definitely encourage them to take public transport.Solution 3: Collaborations with private transport companies such as GrabThe transport authority can collaborate with such companies to introduce a student price for those in tertiary institutions during a specified timing of the day and this would pull such young adults away from the idea of buying a car or motorcycle and therefore reducing the demand for motor vehicles. Solution 4: Further improving the convenience while riding on the public transport (Focusing on MRT and Buses)SMRT can add internet access available everywhere including Bus, MRT, bus stops, bus interchanges and not just on MRT and LRT stations. Other than that, they can also improve the seats on MRT like adding cushioned seats. The frequency of buses and trains can be improved so the waiting time can be reduced and consumers are able to get to their intended locations on time. Solution 5: Introduce carbon tax By introducing carbon tax for motor vehicles, this will let drivers know to control the amount of time they spend driving on the road. Keeping in mind that each car can produce its carbon dioxide as government can implement this measuring equipment to detect and measure how much carbon dioxide emitted from each motor vehicle and if it actually goes beyond the limit for each day that the government has set, they can get fine or get demerit points. Solution 6: Increase in the cost of driving lessonsIncreasing the cost will hesitate for many people from low to middle-income range as they could spend on other expenses or even save this money for other purposes instead of spending this money on driving. Eventually, people will have a thought in mind of taking public transport now since it will be a cheaper rate rather than owning a car. With this effect, it will cause the demand for the motor vehicle to be lower.Solution 7: Provide more shuttle bus servicesBy providing more free shuttle bus services in a shopping mall/selected bus stop which can bring consumers to the MRT station, it will bring convenient for many people and it will attract many people to take this shuttle bus since it is free. On the other hand, for commuters they can take this shuttle bus to MRT station and straight away board the MRT and even lead them to their working place directly. Thus, it will benefit them and even will cause a lower demand now for motor vehicles.Solution 8: Increase in Parking, ERP and Petrol feesBy increasing the cost of this three fees and others, most of the people might have second thoughts about owning a car as this three fees are just part of the expenses that consumers have to spend on it. Consumers also have other expenses to spend on like road tax, insurance and many more. So if there is an increase in the cost of all different fees, consumers might consider to save up the money and choose to take public transport which will be a cheaper rate. The law of demand states the ceteris paribus, the higher the price of goods, the lower the quantity demanded of the goods.(C) Empathise Section:Based on our survey results, our group has received a total number of 40 responses of which most of our respondents are aged 18 to 25 and aged 35 to 44. Our respondents who pick no to taking public transport even if the price was lowered are those that own a car and they prefer using it and this implies that the current public transport system still does not appeal to them much despite the lowered prices.Thus, this means that the public transport system still needs to be improved to appeal to them and ensure that they would not demand motor vehicles as most respondents choose satisfied with our public transport system. Another analysis we can conclude is that cost is the main factor that influences most of our users to take public transport as it will be a cheaper rate than owning a motor vehicle. Thus, the cost is the main idea that the government should work on. Another conclusion we can make is that although majority of our respondents know it is morally correct that motor vehicles contribute to the pollution of the environment, there is a small minority that feels otherwise as they might feel that there are other factors which are more significant to pollution compared to motor vehicles as motor vehicle to them is an important necessity and may not be concerned if it affects the environment in a negative way.(D) Prototype SectionOur group has select solution 3, 5 and 6 from the Ideate section that will help in lowering the demand for motor vehicles.1. EZ-Link implementing points reward system:By introducing this point reward system, many consumers will highly get attracted to this promotion and drivers might even consider taking public transport now as spending their money on transport will be able to get them vouchers, it will be a good deal and worth consumers’ money instead of spending their money on petrol and vehicle maintenance which could not able to get them anything except incurring further expenses. Thus, with the amount of money that consumers had contributed on public transport, the government gains more profit and they could even use this amount of money to buy more new buses or continue to upgrade other facilities like installing aircon for all buses and MRT interchange. With all the new facilities added into it, it will be demand elastic which strongly a change in quantity demanded as it will now cause more people to take public transport and reduce the demand in motor vehicles.2. Further improving the convenience while riding on the public transport (Focusing on Mrt and Buses)By improving the facilities like providing wifi on bus stops and bus interchange, this will attract many people as since wifi has been part of everyone’s daily life, it would be a need for everyone. Moving on, providing aircon on all bus interchange and fans for the bus stops will keep the customers cool down as sometimes the bus takes longer time to arrive at the bus stop and this presents the next solution which is to improve the frequency of bus and MRT so people could get to their destination on time or even earlier. If this improvement is made and it is proven that everything runs well, more consumers would be more willing to use the public transport which the demand for public transport would now increase and would cause a decrease on the motor vehicle.3. Introduce carbon tax By introducing carbon tax for motor vehicles, the government would be able to control the limit for the drivers to drive every day. If the drivers go beyond what the expectations level that has been set for them, drivers could face up the consequences of getting fine or even getting demerit points. With this effect being launch, customers would think of taking public transport now since it would be convenient for them and they do not need to worry of paying tax as compared to driving a car which can be quite tedious and would even have to worried of paying extra tax. It is demand elastic which will cause a huge amount of consumers from driving the car to take public transport now. Using the three solutions above, we now combine the solutions. The best solutions that our group have picked on empathized section is to combine solution one and three together as based on our survey results, many of our respondents pick public transport as their transportation mode and in order to keep all these customers, the government can implement this point reward system to reward consumers like shopping vouchers for continuing to support public transport. Moving on, SMRT can add in more new facilities which links to our third solution which is to attract drivers to try out and experience all the new improvements and features added to the transportation modes in Singapore and this would persuade drivers to spend lesser time driving and this also prevents them from spending money on carbon taxes if it is implemented with the purpose of curbing the driver’s usage of the vehicle as according to many survey results, many respondents do feel that too many vehicles on the road contributes greatly to global warming and therefore, when carbon tax is in effect, drivers would be less willing to drive and this would further encourage them to experience the new improvements and features added to the transportation modes by the government and they would definitely enjoy and would opt to take the public transport more. Since consumers spent more of their money on public transport, the government can even better improve more on other facilities which eventually lead to more and more people to take public transport. Some of the facilities that can be added are like wifi as in these digital days, wifi is a need for almost everyone. Another facility that can be added is aircon for all bus interchange and fans at the bus stop as during some season, the weather could be very humid and with this fans and aircon, it will cool us down which if the bus took longer time to arrive, we would not complain much about it. Overall, all the above methods our group has chosen do hopefully make an impact on drivers and other consumers.

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