Economics is concerned with the economic system and the problem of allocating resources, as most are scarce. They are scarce in terms of being finite, i.e. limited, and therefore decisions have to be made on the best way to use these resources; natural resources, labour and capitol. These resources constitute the "factors of production" and produce the commodities, goods and services. The National Product is the total output of all commodities over a period of time. The way in which goods and services are produced and consumed within society is part of "microeconomics", which is "the study of individual decisions and the interactions of these decisions [including] consumers" decisions on what to buy, firms" decisions on what to produce and the interactions of these decisions, which determine whether people can buy what they would like, whether firms can sell all that they produce and the profits firms make by providing and selling" (Craven 1990:4). Therefore, the main issues concerned with microeconomics are the firm, the consumer, the production and selling, the demand for and supply of goods or services.
Transport economics deals with what the consumer wants in terms of transport i.e. the demand, and the firm whether producing a tangible good, such as a car, or intangible service, such as in-flight service, who sells to supply the customer with what the demand.
Private transport using roads and highways, i.e. cars, has greatly increased in number in the last year. Car sales in the United Kingdom have been increasing over the last three years, and so manufacturers have recognised this demand, and therefore have produced "a wealth of attractive models" to increase competition between firms, supplying the ever-increasing demand. .
DEMAND CURVE: As real income increases, the demand for luxury goods also increases.
As the amount of customers" real income has risen, the demand for luxury goods such as cars has also gone up (D0 to D1), i.