Threshold Network Exercise: Pricing for profit – car parking
1
Scenario
You are approached by the private owner of a city centre car park who
wants to know how to increase his profits from parking during office hours on
weekdays. On a typical weekday, the car park is currently only half full.
What should be your advice?
You are not required to actually find the price, but to consider how you would
use economics to help you make the best decision.
In doing this you should:
(1) Consider an economic framework or model that you think is going to be
useful.
(2) Identify three important economic concepts from the list below you would
use in answering this question and explain why they are important in this
context.
Demand
Supply
Competition
Indirect taxation
Public good
Margin
Investment
Economies of scale
Elasticity of demand
Opportunity cost
Average costs
Fixed costs
(In the list there are concepts that are irrelevant and concepts that are useful. Some are
arguably more useful than others. Although there are some ‘wrong’ answers there is not just
one ‘correct’ one. Our feedback highlights our choice of three concepts but you will find we
use others on this list as well. In making your choice try to discard the irrelevant and consider
what you think is the most important amongst the others and why.)
Write your answer either hard copy or in your own word
processing file in order to compare to our feedback.
 Feedback and Reflection
Copyright: Embedding Threshold Concepts Project
24/08/07
This project is funded by the Higher Education Funding Council for England (HEFCE) and the Department for
Employment and Learning (DEL) under the Fund for the Development of Teaching and Learning.