Micro Economics

Corporative

Communication

Corporative

Communication

Aishath Suha

BBUS-HRA2

Lecturer: Gilbert Gorge

Contents

Abstract: 3

Introduction on the transportation service in Maldives 3

Transport service in Maldives based on income elasticity 4

The impact of imposing tax on the transport service 8

Reference 11

Appendix 1 12

Abstract:

The purpose of this assignment is to categorize whether the transport service in Maldives is a normal good, luxury good or necessity good based on income elasticity of demand. And whether the profitability of tax impose and subsidies is on the taxi operators, consumers, or the government.

Introduction on the transportation service in Maldives

Transportation plays a very important role in our daily lives. Just like any other countries, Maldives also have major modes of transportation. Maldives is located in the Indian Ocean with 26 atolls which locates in different areas of the ocean while it has 1190 islands.

Almost 90% of the Maldiv es is covered by sea. Hence, sea transportation is the essence of Maldivian economy. Earlier, Dhoani or Vedi were used to travel from island to island. A Vedi is a large dhoani which is used for trading between Male’ and the outer atolls (Ministry of Transport and Communication). In the era of technologies, speedboat was a service which was introduced as a development of sea transportation. Due to introduction of speedboats, transportations held within islands and atolls were competitively faster, safer, and easily done. However, to the small destinations like Male’ to Villigili is done by ferry services but due to the rapid increase of population and demand for the service, a service was introduce named is “express” in 2012.

The industry of public road passenger transport in Maldives started in Male; in early 70’s by private individuals. In mid 80’s they formed taxi centers and started to give taxi services to the public. During the year 1989 Ministry of Transport started...