Answer to Question #323740 in Economics for Lina

Question

Although parking meters in urban centres may yield little revenue because of the costs of installation and the employees who check and maintain them , most cities still regard them as essential for proper traffic flow. Explain why this is so using the concepts of demand, supply and price.

Answer 1

It provides a disincentive to park for an extended period of time (reducing demand by increasing price), providing more utility to local businesses who depend on available parking in order to generate business. So while it may not generate a significant revenue by itself, it has the effect of generating more revenue via tax money collected from businesses.