Answer the following two questions.
Question 1. Why is the transportation industry cyclical in nature?
Question 2. In terms of capacity, what steps can transportation companies take to avoid or at least mitigate the negative effects of economic downturns like this most recent one?
Transportation Name: Institution: Response to question 1 The transportation industry is cyclical in nature because of its sensitivity to business cycles. The performance of the sector depends on the performance of the entire economy. For example motor vehicles rely on oil products like diesel and petrol to propel their engines. When the global oil prices escalate the cost of fueling increases and hence investors in the transport sector, increase the transportation fee. Due to budget constraint, people would reduce the number of trips to fit their budget, and this affects the transport sector negatively leading to low profit margins (Dartez, 2012). On the other hand, when the global oil prices reduce, the cost of fueling decreases and that compels investors in the transport sector to reduce the transportation fees. That influences the passengers to make more trips and hence leading to higher profit margins in the industry. Transporta