Hey there! Sign in to join this conversationNew here? Join for free
x Turn on thread page Beta
    • Thread Starter
    Offline

    0
    ReputationRep:
    We got two types of goods, train travel and air travel. Given that train travel is inferior good.
    So what is the substitution and income effect of a government subsidy on train travel? How will the quantity demanded of two goods change?

    As far as I am concerned, the substitution effect will reduces air travel and increases train travel. The in come effect will however increases air travel and decreases train travel. Is that right? If so what is the final change in each form of the travel? Really confused.

    Thx guys for help
    Offline

    0
    ReputationRep:
    (Original post by Caberus)
    We got two types of goods, train travel and air travel. Given that train travel is inferior good.
    So what is the substitution and income effect of a government subsidy on train travel? How will the quantity demanded of two goods change?

    As far as I am concerned, the substitution effect will reduces air travel and increases train travel. The in come effect will however increases air travel and decreases train travel. Is that right? If so what is the final change in each form of the travel? Really confused.

    Thx guys for help
    I think you'd be better off asking this in the economics forum.
    • Study Helper
    Offline

    15
    Study Helper
    It's double posted on there.
 
 
 
Reply
Submit reply
Turn on thread page Beta
Updated: April 5, 2013
Poll
Do you agree with the proposed ban on plastic straws and cotton buds?
Useful resources

Make your revision easier

Maths

Maths Forum posting guidelines

Not sure where to post? Read the updated guidelines here

Equations

How to use LaTex

Writing equations the easy way

Student revising

Study habits of A* students

Top tips from students who have already aced their exams

Study Planner

Create your own Study Planner

Never miss a deadline again

Polling station sign

Thinking about a maths degree?

Chat with other maths applicants

Can you help? Study help unanswered threads

Groups associated with this forum:

View associated groups

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.