Thursday, November 08, 2007

Unit 1: Cross elasticity of demand, substitutes and demand for bus services

This Guardian article shows the effect of rising fuel prices for motorists on demand for bus services

http://www.guardian.co.uk/business/2007/nov/07/transportintheuk

a) Define Cross elasticity of demand
b) What is the relationship between rising fuel prices and the demand for bus services?
c) What other factors does the article suggest are leading to an increase in demand for bus service
d) Using a S&D diagram explain the effect on the bus service market of these changes

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