Reference no: EM133372663

Question 1 - A

a) If the cost of crossing the Confederation bridge increases, how would this impact total tourism expenditure in PEI?

b) If the cost of crossing the Confederation bridge increases, how would this impact total tourism expenditure in New Brunswick?

Question 1 - B

a) If restaurants in Halifax increase their prices, what will be the likely impact on total expenditure by tourists in Nova Scotia?

b) If airlines increase the prices for a flight between Toronto and Halifax (in nonpandemic times), how will tourism expenditure in Nova Scotia be affected?

Question 2

a) What is the relationship between the cost of travelling to a destination and the total spending of tourists at that destination?

b) Why do regions that receive relatively large numbers of tourists tend to have higher restaurant prices than other regions? Question 3 - A

Ontario is one of the largest sources of visitors to PEI.

a) How does the law of Demand apply to an individual's decision to visit a destination?

b) If the income of potential travelers increases, will the number of visitors to PEI from Ontario increase?

c) At present 20,000 tourists enter the province by automobile and 10,000 enter by air. If the price of air travel increases by 10%, will the likely decrease in total visitors be more or less than the decrease in visitors who arrive by air

Question 3 - B

Transportation costs (on average) for a resident to New Brunswick to visit PEI are $250, with other costs (accommodation and food) averaging $600. At present, 2000 visitors enter the province each month. It is expected that a 10% increase in the cost of transportation would decrease the number of visitors to 1700.

a) Is the number of visitors to PEI elastic or inelastic with respect to the cost of visiting the Island?

b) Is the number of visitors to PEI elastic or inelastic with respect to the cost of transportation?

Question 3 - C

Niagara falls is one of the most popular tourist attractions in Canada.

a) If all the hotels in Niagara falls and the surrounding area raise their prices, would you expect this to have a more significant impact (as measured by elasticity) than if a single hotel in Niagara falls raises its price?

b) If many tourists also visit Toronto on their trip, would you expect the demand for hotels in Niagara falls to be more or less price elastic than otherwise?

c) If the price elasticity of demand is 1.1, by how much will the price need to rise to observe a 6% decrease in the number of visits.

Question 4

Geography plays a large role in determining travel patterns.

a) Consider the case of two countries, one large (in terms of area) and the other small. Would you expect the tourists from one country to be more sensitive to changes in the value of their local currency with respect to international travel?

b) Is it possible for two destinations to have a negative cross price elasticity of demand between them?

c) If two destinations have a positive cross price elasticity of demand between them, would you expect the price elasticity of demand in each destination to be higher or lower?

Question 5

a) How does asymmetric information impact the ability of a region like PEI to attract more tourists from Europe or Asia? Has this changed over time?

b) How does 2nd degree price discrimination affect the income of package tour distributors?

Question 6

While a significant majority of Canadians taking trips outside of Canada visit the U.S. each year, there has been growth in the number visiting other international destinations.

a) Based on Chapter 4 and 5, how would you expect trend to affect package tour operators and travel agencies?

b) How would you expect this trend to affect the quality (as defined by the textbook) of trips taken by Canadian travellers? Question 7

a) Chapter 5 explain how the Principal-Agent problem affects the use of travel agencies by consumers. Does this issue also apply to package tour operators?

b) How does the growth in online sales affect the issue discussed in a)?

c) If consumers repeatedly visit the same destination, how is the demand for travel services (package tours and/or travel agents) affected?

Shorter Questions

1. The evidence suggests that travel is a luxury good (based on income elasticity of demand). Does this mean that trips to all destinations are luxury goods?

2. Explain some reasons why visits to some destinations maybe highly price elastic, but others may not.

3. Is it possible for two destinations to have a negative cross price elasticity of demand between them?

4. Explain how fluctuations in a country's currency affect the amount of tourism expenditure it receives.

5. Why do regions that receive relatively large numbers of tourists tend to have higher restaurant prices than other regions? 6. How does asymmetric information impact the income of travel agents?

7. How does asymmetric information impact the ability of a region like PEI to attract more tourists from Europe or Asia?

8. How does 2nd degree price discrimination affect the income of package tour distributors?

9. What is the relationship between the cost of travelling to a destination and the total spending of tourists at that destination?

10. How does product differentiation affect consumers? Firms?

11. If you are a consumer, would you rather the local restaurants are part of a perfectly competitive market or a monopolistically competitive market?

12. Are mergers between firms in an Oligopoly market good for consumers?