EFFECT OF TRANSPORTATION ON THE PRICES OF COMMODITIES

CHAPTER ONE

INTRODUCTION

BACKGROUND

The present day condition of the continuous rise in prices of commodities (consumable and durable) all over the country is well known to the populace and thus, the price increase has affected individuals in several ways, such as reduction in the standard of living people, high interest rate, etc the factor which affect this price escalation of consumable and durable commodities are broadly categories into human and natural factors. In the first place, the prices of the consumable and durable commodities will be high if many middle men partake in the process of distribution of the goods.

Also, it has been proved that production cost is a direct valuable an the price of goods after every producer, has a duty of not only to recover investments but also to maximize profit. Secondly, the prices of goods can also be attributed to natural reasons, which are beyond the control of man. For instance, a period of unpleasant weather of heavy rainfall will definitely result to low production output. Thereby leading to a reduction in the supply of consumable product and consequently affects their prices. It is clear therefore that price of goods is an inverse proportion of the market supply.

Apart from the factors mentioned above, other factors such as transportation cost labour and in fact all the factors of precaution account for the high increase in the prices of consumables products. The cost of all these are added to the real cost of the product to inflate or increase the prices. Hence, it implies that when the prices of these factors increase, indirectly the prices of the production will definitely increase and vice-versa.

STATEMENT OF THE PROBLEMS

In this research the main concern is transportation, the effect of transportation on prices, how does bad transportation system affect the prices of consumable and durable commodities? Also what relationship has distance with these products that are transported have on the relative prices of each products? Does good transportation system reduces prices of consumable and durable products in any way? These are aforementioned questions from the background to this study.

PURPOSE OF THE STUDY

The purpose of this study is to analyze the effects of transportation on relative prices of some selected products in Oredo L.G.A. of Edo State.

This study will also highlight on the relationship between transportation and the price of consumables products in this local government area.

Also, this study will also try to show the effects of this high price on those that are involved in consuming the gods (the consumer).

Finally, to highlight and suggest solution or remedy to combat such price increase.

SIGNIFICANCE OF THE STUDY

There are quite a lot of contributions that this study will make. In the first instance the study will clearly show how transportation cost affect the prices of consumable and durable products. It will also show the various means of transportation found in Oredo Local Government Area of Edo State and the problem association with them.

The government on their part has been insensitive about the problems of transportation in most Local Government Area and this has resulted in poor transportation system. Therefore, an increase of relative price of the consumable and durable products. In synopsis therefore, a critical study of all the points aforementioned will help the government to look at these problems of inadequate and inefficient transportation system especially at the local government level and find possible solution to ameliorate the plight of the people (consumers).

RESEARCH QUESTIONS

1. There is no significant effect of transportation cost on prices of commodities in Oredo Local Government Area of Edo State.

2. Bad transportation system does not affect prices of commodities in Oredo Local Government Area of Edo State.