Inland Shipping Waterways
Question 1
Explain, in one sentence each, what supply- and demand functions are
Supply function: The supply function is a mathematical expression of all the factors that affect the ability or willingness from a firm to produce goods for the market at a certain cost.
Demand function: The demand function is the relationship between quantity consumed and a person's maximum willingness to pay for the product and the net profit and benefit he will receive from the transaction.
Question 2A
Which variables (in the dataset or not) do you expect to have a significant impact on the demand for shipping? Do you expect these variables to have a positive or negative effect? Do you expect a small or large effect?
Capacity - Carrying capacity of the inland ship in tones
This variable has a positive effect on the demand function. A larger capacity will for example increase the possibilities of different transports by ship. On the other hand, a more suitable capacity will for example decrease the total costs because of waste reduction (over & under capacity). Both examples will therefore increase demand. However, the effect of this variable is probably small because the carrying capacity itself is not directly a change in price.
Distance - Distance (in km) between origin and destination
This variable has a negative impact on the demand function. When the distance between origin and destination is too large it is not profitable and sometimes maybe not even possible to transport the shipment through the inland waterways. In these scenario’s shipments over sea or in air are more suitable. The effect of the distance is probably small because it is not directly influencing price or quantity.
Cargo - the cargo type transported
This variable has a positive effect on the demand function. There are some materials/goods which are generally transported by inland waterways, for example coal and sand. These materials are too heavy or too large in quantity that
Explain, in one sentence each, what supply- and demand functions are
Supply function: The supply function is a mathematical expression of all the factors that affect the ability or willingness from a firm to produce goods for the market at a certain cost.
Demand function: The demand function is the relationship between quantity consumed and a person's maximum willingness to pay for the product and the net profit and benefit he will receive from the transaction.
Question 2A
Which variables (in the dataset or not) do you expect to have a significant impact on the demand for shipping? Do you expect these variables to have a positive or negative effect? Do you expect a small or large effect?
Capacity - Carrying capacity of the inland ship in tones
This variable has a positive effect on the demand function. A larger capacity will for example increase the possibilities of different transports by ship. On the other hand, a more suitable capacity will for example decrease the total costs because of waste reduction (over & under capacity). Both examples will therefore increase demand. However, the effect of this variable is probably small because the carrying capacity itself is not directly a change in price.
Distance - Distance (in km) between origin and destination
This variable has a negative impact on the demand function. When the distance between origin and destination is too large it is not profitable and sometimes maybe not even possible to transport the shipment through the inland waterways. In these scenario’s shipments over sea or in air are more suitable. The effect of the distance is probably small because it is not directly influencing price or quantity.
Cargo - the cargo type transported
This variable has a positive effect on the demand function. There are some materials/goods which are generally transported by inland waterways, for example coal and sand. These materials are too heavy or too large in quantity that