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Learning Objectives

Learning Objectives. Know the economic generators and impact of tourism Perceive the economic importance of tourism in various regions of the world Understand multipliers Know about balance of payments Comprehend elasticity and inelasticity Know about tourism satellite accounts.

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Learning Objectives

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  1. Learning Objectives • Know the economic generators and impact of tourism • Perceive the economic importance of tourism in various regions of the world • Understand multipliers • Know about balance of payments • Comprehend elasticity and inelasticity • Know about tourism satellite accounts

  2. Three Major Goals of Tourism 1) Maximize the amount of psychological experience for tourists 2) Maximize the profits for firms providing goods and services to tourists 3) Maximize the direct (primary) and indirect (secondary) impacts of tourist expenditures on a community or region These goals are often compatible but in certain situations they can be incompatible

  3. Constraints Faced in Tourism Goal Attainment • Demand • Supply of attractive resources • Technical and environmental constraints • Time constraints • Indivisibilities • Legal constraints • Self-imposed constraints • Lack of knowledge • Limits on supportive resources

  4. Economic Multipliers • Direct Effect • Result from visitors spending money in tourist enterprises and providing a living for the owners and managers and creating jobs for employees • Indirect Effect • This is the multiplier impact. This is where visitor spending circulates and recirculates • Employment Multiplier • Income Multiplier

  5. Example $1,000 of tourist expenditure and an MPC of 1/2. Multiplier = = $2,000 Income Multiplier Formula Multiplier = where M = marginal (extra) P = propensity (inclination) C = consume (spending) MPC S = savings (money out of circulation) MPS A more simpler formula is Multiplier = 1/MPS © John Wiley & Sons, Inc, 2009

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