Tourism industry in Canada

The tourism industy can be related to cross elasticity of demand and income elasticity.  Income elasticity is a measurement of the change in income and the time the quanity demanded for products and services witll increase or decrease. Gailloreto (2012) defines tourism as " accommodation, transportation, restaurant, retail, museum, outdoor adventure, car rental, taxi, performing arts, heritage, culture, sports, festivals, events, wine and beer tasting, golf, spa and other sectors"(P3). Currently the tourism industry in Victoria, BC is on a downward slope as people are unable to afford to travel to Canada as it is expensive. Gailloreto (2012) states that Victoria is working with "the Tourism Industry Association of Canada, to make our border more amenable to travel while keeping it safe"(P7). Canada is a expensive country to travel to and Victoria has recongized this and are working to find a way to decrease the air fares (Gailloreto, P7). Victoria is implementing campaigns and the media to get Canada's name to all of the tour operators and travel agents (Gailloreto, P8). By Victoria working with all types of advertising and different campigns to promote the tourism in Canada it will allow tourism to increase.

The tourism industry in Victoria has elasticity degree of elastic as there are still people travelling to Victoria just not as many as there could be. In the income elastic is normal products as travelling is considered a luxury and the coefficient is < than zero. Income has an affect on if people can afford to travel or if they can only afford to have the nessessities. Below is a diagram of income elasticity.

Gialloreto, R. (2012, Jan 06). Tourism - huge impact hardly noticed; despite contributions to economy, public funding keeps plummeting. Times - Colonist, pp. A.11. Retrieved on January 25, 2012 from http://search.proquest.com/docview/914601693?accountid=13652 http://search.proquest.com.libresources2.sait.ab.ca/docview/914601693/fulltext/134815C79F35D2D49C9/100?accountid=13652

Elasticity & Revenue

I recently read an article explaining the relationship between price elasticity and total revenue. Bond (1998) states that the "musicians in Montreal believe they should be paid the same as their counterparts with the Philadelphia Orchestra"(P3). The Montreal Orchestra is part of a union which has demands on the requirements the Orchestra should pay the musicians at. Bond (1998) examines the following demands: Subsidies from Quebec, Income from the Orchestra and the sales of tickets. There is a correlation between the ticket sales and total revenue which can be defined as elasticity(P7). This concept of elasticity allows businesses to analyze the changes in prices and how it will impact their total revenue. In order for the Orchestra to increase their total revenue they require time to increase their audiences/ticket sales.

Bond (1998) states the  "union has threatened to boycott rehearsals" and "without rehearsals the performance would suffer-poor performances result in low ticket sales"(P20). The below graph indicates the relationship between elasticity and total revenue. Ticket sales are required in order to make revenue. The musicians need to be at rehearsal to increase their performance and ticket sales. The musicians want an increase in salary and get the same compensation like the Philadelphia Orchestra. If they do not receive the increase they will not attend rehearsals. The ticket sales will start to decline as the musicians are not rehearsing. Since the ticket sales are declining the price begins to decrease as well. The upper part of the demand curve is elastic which indicates the price falls and the total revenue will increase. The lower part of the demand curve is inelastic and the price falls and so does the total revenue.

Bond(1998) explains that the Montreal Orchestra needs to increase the number of concerts and prices of the tickets to have a result of increased salaries for the musicians(P16).

Bond, D. (1998, Jul 18). Montreal musicians hit sour notes: Unreasonable wage demands hold possibility for pianissimo finale rather than fortissimo encore. The Vancouver Sun, pp. E.21-E21. Retrieved from http://search.proquest.com/docview/242862051?accountid=13652

 http://search.proquest.com.libresources2.sait.ab.ca/docview/242862051/13480AEB5742973A9ED/8?accountid=13652

Graphing Changes to Demand

Looking at the graphs on pg 50 and 51 illustrated the changes in graphing of the demand production. The following factors determine if the demand will increase or decrease:

• A substitution effect - is when a consumer can purchase a similar product at a different price.
• Income effect - a consumer could have received a increase in their income would then have an increase in the quanity demanded for the product.

I go to the grocery store ever sunday and I am not very picky on the products I buy. I will usually buy yogurt and other products. I go to the area where the yogurt is and compare the quanity and prices of each similar items. I usually am not loyal to one brand of product. This is an example of a subsitution effect. I am purchasing similar products at a much lower price - which ever one is usually on sale that week.

This can be represented in the below graph.

Games about the Economy & Marketplace

I decided to play the McDonald's Video Game & Dinner City. The McDonald's game allows you to manage the cows/grain (supply) and the sales of the burgers with numerous customers. The Dinner City allows you to manage your business and the decisions you choose. I found it interesting when you make a move it affects the whole business. The price influences your decisions to buy certain additions to a business. If you are able to increase your seats of your restaurant by 2 and it increases your revenue by $5 for a price of $400 it could be worth it in the end. One must spend money in order to make money. To increase the demand of the products can be done by advertising, see what the customers preferences are and see the prices of similar products to yours. To increase the supply is done by researching the number of suppliers for the products, the prices of the resouces to make the products and the future agreements of suppliers. A couple tips:  I found that if I rewarded my employees they kept working without any issues. I also found that there were some threats at my restaurant from the global environmentalists. I hired a politician to keep it the issues/threats under the raps. Both games allowed a more rounder/fuller picture of the challenges that an economic system/ Diner City/ McDonalds face from managing the supply and sales of the products.

Production Possibilities

Economies function by examining all of the possibilities that will allow the society to grow. A society’s resources and technologies play a huge deciding factor on what the society will choose to produce. The scarcity of resources and technologies impacts the economy and makes them unable to produce everything the society needs.

A Production Possibilities graph associates the efficiency of resources and new technologies that are available to a society.  This graph assists in comparing two different economies and their choices.  Each society has different values of the types of goods or services they would like to produce. If an economy decides to produce 5,000 tons of fuel the next best option would be to produce 10,000 tons of corn given their resources. The society can grow as an industrialized nation and or to satisfy the people's needs and wants. This is called an opportunity cost which the economy can compare which is more products are suiting for their society - the production of fuel or corn. By societies specializing in certain products this enables other societies to do the same and encourages trading. An economy's manufacturing costs increase the cost of the item will rise as well; this is called the law of increasing costs. Societies can focus on increasing production of an item which in turn diminishes production of other items they produce. This causes the items to increase in value due to the scarcity.

Scarcity is involved in everyone's life whether you are a student, working full-time or unemployed. I work full-time, getting married in 2012 and taking a microeconomic class. I face a scarcity of time. I leave my house at 6:30am and get home at 6:00 pm every night. I have to allocate my time according to what is important. By placing a value on a decision and comparing it to another valued decision I am able to use the next best choice. One significant opportunity cost that I have experienced by returning to school is deciding to take another course to excel in my job or focusing on my upcoming wedding. We are all faced with these decisions and by using the opportunity cost we are able to make a choice.