Economics Essay Example | Topics and Well Written Essays - 1500 words - 2

Economics - Essay Example Thus, the latter region displays a greater degree of price elasticity of demand. It is due to the conjunction of both kinds of goods – luxury and regular, within the same consumption basket that the price elasticity of demand in this case has been evaluated as close to unity. A probable solution to the problem could be to segregate the consumption baskets for two types of commodities. However, the prime issue is that Guam does not even have a proper consumption basket on the basis if which CPI could be measured properly. This might also lead to a miscalculation of the actual price elasticity of demand. 3. The income elasticity of demand had been found to be more influential than price elasticity. The Japanese are found to be highly sensitive to fluctuations in their levels of income rather than the price level ruling over the region where they are touring. For instance, the numbers of visits by Japanese tourists were lowered during periods of recession prevailing in Japan. How ever, the demand for ultra-expensive luxury and branded items being sold in Tumon, the prime tourist centre in Guam was little affected by a slight change in the price of commodities. On the other hand, the discount kiosks in Guam’s K-Mart attracted more and more number of tourists though the nature of demand fluctuated over time. It rather seemed that a rise in the level of prices for discounted commodities led to a sharp fall in the demand for the same, while the demand for ultra-expensive luxury items were found to be quite inelastic in nature. The prime reason could be presumed to be that the demand for the former commodities comes from tourists belonging to a relatively lower income bracket while that for the... This paper approves that the Japanese are found to be highly sensitive to fluctuations in their levels of income rather than the price level ruling over the region where they are touring. For instance, the numbers of visits by Japanese tourists were lowered during periods of recession prevailing in Japan. However, the demand for ultra-expensive luxury and branded items being sold in Tumon, the prime tourist centre in Guam was little affected by a slight change in the price of commodities. China had maintained a closed door strategy since long which prohibited both foreign tourists from visiting the nation and domestic nationals to involve in outbound travels. However such a stance has taken a toll in the nation’s development strategies as the country realised its shortage of ample foreign resources to support its strategy. Hence, the national government chose to open up to foreign tourists who bring foreign exchange reserves to the national treasury. This essay makes a conclusion that tourism today is considered as a part of international trade and is often compared with exports that an economy is involved in. This is because tourism results to an accumulation of foreign exchange reserves within a nation thus propping it up to participate in other economic activities. Hence, China has been acting upon to enhance its trade ties with other nations. This is because better the participation of a nation in trade with its peers more will its popularity grow opening up its chances to attract more tourists.