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Past paper question
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Im just doing some past paper questions for Economics, and i came accross this question im not sure the answer would be.
From the 1st April this year, the disabled and pensioners will recieve free bus travel across scotland, with no restrictions on when they can travel. The bus operators will recieve 73.6% of the average adult single fare for each journy by a pensioner or disabled traveller.
Using a supply and demand analysis, examine the effects of this policy on the following markets:
The market for train journeys
The market for taxis
The market for visitor attractions across scotland, I think i can answer the last two, the demand curve for taxi's would shift to the left because of consumers going to alternatitives, and the market for visitors attractions, the demand curve would shift to the right? Because more people are able to visit them freely? Im not sure about the market for train journeys though, what would happen?
Thanks
John
From the 1st April this year, the disabled and pensioners will recieve free bus travel across scotland, with no restrictions on when they can travel. The bus operators will recieve 73.6% of the average adult single fare for each journy by a pensioner or disabled traveller.
Using a supply and demand analysis, examine the effects of this policy on the following markets:
The market for train journeys
The market for taxis
The market for visitor attractions across scotland, I think i can answer the last two, the demand curve for taxi's would shift to the left because of consumers going to alternatitives, and the market for visitors attractions, the demand curve would shift to the right? Because more people are able to visit them freely? Im not sure about the market for train journeys though, what would happen?
Thanks
John
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The point that would strike me is that there are normally restrictions as to time of tra vel on the trains and this says that there are no restrictions on when you can travel by bus. I would expect people who have a choice of mode of transport whould opt for free travel on the bus rather than a restricted although it is a cheap fare on the trains.....
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