ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In general, rail demand is less elastic (or stickier) to changes in bus than bus demand is to changes in rail. For example, a 10% fare decrease on rail relative to bus decreases bus demand by 2.8% (ij = 0.28) while a 10% relative decrease in fares by bus acts to decrease rail demand by only 1.5% (ij = 0.15).

Detailed explanation-2: -The airline industry supply side factor includes factors such as frequency of service, availability of seat, time of departure and arrival and number of in-transit stops influences the distribution of demand between competing carriers and play a major role in affecting the specific demand of airline (Chin 2002).

Detailed explanation-3: -What happens in the market for airline travel when the price of traveling by rail decreases? The demand curve shifts left. Rail and airline travel are substitutes. If the price of a substitute declines, then the demand curve for the substitute product shifts to the left.

Detailed explanation-4: -A price elastic response to air travel price increases at the route level means that demand falls at a proportionately higher rate than the increase in price.