Introduction
- Definition of price-elasticity of demand
- Meaning of price-elastic or price-inelastic demand for tour packages
- Examine the determinants of PED to assess whether demand for tour packages are price-elastic or price-inelastic
Main Body
1) Identify the determinants of PED
- Assess how it will affect the value of PED
- Discuss it in the context of tour packages
- Degree of necessity of dd
- Availability of substitutes
- Proportion of income spent on the good
- Time period for consideration of purchase
2) Analysis of the significance of determinants of PED
- Time period – search time is longer – PED-elastic
- Tour agency organizes more tour exhibitions with fall in price to increase in Qtydd
Conclusion
The understanding of the determinants of PES will reveal the economic profile of the consumers which reflects the consumption behavior and purchasing power and thus will determine when the demand for tour packages is price-elastic or price-inelastic.
