Application of Elasticity Theory in Tourism Market

The application of elasticity theory in tourism market is as follows:

In economics, the theory that studies the response or sensitivity of the relative changes of dependent economic variables to the relative changes of independent economic variables. The concept and definition of elasticity was put forward by a Marshall in Principles of Economics. The theory of elasticity was constantly supplemented and improved by later economists, and was widely used in economics.

When there is a functional relationship between two economic variables, the change of economic variables as independent variables will inevitably lead to the change of economic variables as dependent variables. Elasticity refers to the response or sensitivity of the relative change of the dependent variable to the relative change of the independent variable.

Elasticity theory is a theory to explain the quantitative relationship between price change and demand change. Elasticity theory is divided into demand elasticity and supply elasticity, and demand elasticity is divided into price elasticity, income elasticity and cross elasticity.

The factors that have an important influence on the elastic coefficient are substitutes and time. The greater the number and similarity of substitutes, the greater the elastic coefficient; On the contrary, the coefficient is small. The elasticity coefficient of consumer goods is small in the short term and large in the long term. In addition, the use of consumer goods, the durability of consumer goods, the cost of products, and the length of product production cycle all have certain effects on the elastic coefficient.

Demand elasticity includes

1, the price elasticity of demand. An index to measure the response degree of a commodity's demand to its own price change, calculated by dividing the percentage of demand change by the percentage of price change.

2. Income elasticity. An indicator to measure the response of the demand of a commodity to the change of consumer income, divided by the percentage change of demand.

3. Cross elasticity. An index to measure the degree of response of the demand of one commodity to the price change of another commodity is calculated by dividing the demand percentage of the first commodity by the price change percentage of the second commodity.