Académique Documents
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Economics of
Tourism
Chapter 1 by Jeoffery
Walton
Introduction
Tourism
Introduction
The industry includes many experiences, such
as
amusement parks
historical sites
fine restaurants
cruise ships
wonderful destinations and attractions like the
Cayman Islands
Definition of Tourism
According to the WTO, tourism is defined as the
activities of persons travelling away from their
normal surroundings for up to one year for
leisure, business, or other purposes, but not
including activities where the traveler is paid for
the place visited.
Supply
The cost for producing goods and services
has been the greatest influence on business
firm behavior.
Much of the industry has two special features
that can help you better understand what is
happening in the many segments:
1. Producing services requires high fixed
costs and low marginal costs spread
across a wide range of services.
2. The business has capacity constraints at
the top end of that range at any time.
Supply
High fixed costs i.e. producing any level
of service requires a substantial initial
investment in capacity.
Low marginal costs i.e. after the initial
unit of service is produced, additional
units of service cost very little.
Capacity constraint the limit on the
maximum amount of output that can be
produced per period.
Demand
Demand is the relationship between the price and
the amount of a good or service that people buy.
At higher prices consumers buy less and at lower
prices they buy more.
Income is highly influential on tourism consumer
demand behavior.
Although consumers with different ranges of
income participate in tourism, it is known that
consumers with higher incomes increases tourism
demand.
Government Regulation
Encouragement - Governments have had
important impacts on tourism and promoted the
industry in various ways, some of which are:
Direct cash subsidies
Subsidized facilities
River and seaport facilities
Airports and roads
Advertising
Safety regulation
Government Regulation
Discouragement - Governments have also
discouraged tourism in some ways, one of the
most direct and most frequent ways being
through taxation.
Conclusion
As we have learned, tourism includes travelling
outside of ones surroundings for business or
leisure and returning within one year. It provides
services, employment, and investment returns to
a large amount of people around the globe.
Included are concepts of economics, such as
supply and demand, technology, and government
regulation. In the mix, are many domestic and
international organizations who promote and
analyze the industry.
Reference
Reece, W. S. (2010). The economics of
tourism. College of business and
economics: West Virginia University