1 / 10

The Price of Rail Travel

The Price of Rail Travel. Matt Saunders Lewis Twum James Meehan. Substitutes and Compliments. Substitutes – other methods of travel are substitutes for trains and can be weak or strong. Compliments – things that go well with a train journey and can be weak or strong. Demand.

etana
Download Presentation

The Price of Rail Travel

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Price of Rail Travel Matt Saunders Lewis Twum James Meehan

  2. Substitutes and Compliments Substitutes – other methods of travel are substitutes for trains and can be weak or strong. Compliments – things that go well with a train journey and can be weak or strong

  3. Demand • Derived demand – if demand for rail travel increases then the demand will sub sequentially increase for raw materials such as steel. Other things that increase in demand include: • Workers (train drivers, ticket inspectors. Etc.) • Trains • Raw materials for trains (e.g. steel, glass, plastic) • Composite demand – trains have a couple of uses which are freight trains and passenger trains. • Freight trains – they are trains that carry raw materials to be used in production such as coal, iron and stone. • Passenger trains – they are trains that carry people to different destinations such as south west trains.

  4. Are prices high or low in the market? • The prices within the market are very high and have been rising above the “Consumer Prices Index” which show that there has been a high level of inflation in the market. • For example, in2003, the “Rail Fares” were at 225 whereas the CPI was at 180 approximately, which has more than doubled since 1988.

  5. What are the demand factors that affect price? • Many people use the trains in the morning and this has been taken advantage of by introducing a “peak” time where the prices are much higher. • The price is much higher also because the substitutes are of a lower quality meaning people prefer to use the train services.

  6. What are the supply factors that affect price? • There is a high supply of trains to cope with this demand. The price increases as people are willing to pay the high amounts to reach their destination. • Certain times of the day have more trains running, and the price is higher also to make up for this.

  7. How does elasticity affect the product in your market? • Elasticity affects the market with substitutes. For example, if the price of buses decreased, there would be an increase in demand for the train services. • Elasticity also affects the market with complements. For example, train journeys and iPhones can be seen as weak compliments as the phone is something that a person would like to have for their journey.

  8. Problems in the Market • Prices are very high, this is because there are no close substitutes so the price can be high as people will still buy the train tickets • Complementary goods are expensive as people are in a rush at train stations • Excess demand for the trains • Not a high capacity

  9. Government involvement • Government put tax on tickets • Government due health and safety to make sure trains are safe. This raise prices for tickets

  10. What government could do • Subsided prices-this is when they pay for some of the train price so its cheaper for the pubic • They could set a maximum price to reduce prices • They could

More Related