Demand and Factors that Determine the Demand for Rail Transport Between London and Preston - Assignment Example

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In economics, demand refers to the amount of a good or service that a consumer or a group of consumers have the desire to purchase, have the ability to pay for, and are willing to pay for – during a particular period of time…

Extract of sample "Demand and Factors that Determine the Demand for Rail Transport Between London and Preston"

Download file to see previous pages According to the law of demand, with other factors held constant, generally, the demand decreases/increases with the increase/decrease in price of the good. This relationship between demand and price is plotted on a graph as a “demand curve” as shown in Figure 1.
What factors determine the demand for rail transport between London and Preston? The demand for rail transport between London and Preston depends on the following factors: 1. Price of rail travel between London and Preston: The most important factor that determines demand of this transport is the price of rail ticket to travel between London and Preston. Travelers would compare this price of ticket to cost of using alternative transport. This is important not only for people travelling once in a while but also for frequent travelers. If there exists considerably reduced fare possibility for frequent travelers, the demand could be expected to be higher from these frequent travelers would have lower cost of travel. 2. Time taken by rail travel between London and Preston: Time taken to travel by train is another important factor. If the time taken by train is considerably longer than other means of transport, the demand may be lower for rail travel. 3. Quality of rail service between London and Preston: The quality of service could also be an important factor. It includes not only the quality and comfort of travel by train but also other factors like the frequency of trains, on-time arrival, and the time of departure/arrival of trains. Frequency of trains is important so that if consumer(s) change their itinerary suddenly, if there are alternative trains frequently running, they would not be forced to shift to another means of transport. Next, if the trains are frequently running late, consumers may not find the rail travel very efficient. Also, if the departure and arrival times of trains are not convenient, consumers would not find rail travel very attractive. For example if trains arrive only late at night or if the trains run during the entire length of the day, consumers may be put off. 4. Attractiveness of alternative modes of travel between London and Preston: There could be several other ways consumers to travel between London and Preston. If these services are more attractive, then demand for rail travel would be low. The attractiveness of these alternatives also depends on the relative price of these modes, relative comfort, and other factors. Some of these are discussed below for the three other possible modes of transport a. By car: Several factors could influence the attractiveness of going by car instead. These factors include: fuel price (cost of taking the car), relative length of time taken to drive compared to rail travel, and quality of highways (comfort of ride). b. By air: Factors influencing the relative attractiveness of air travel are: price of air travel, relative total time taken to get from “door to door”, and of quality air transport services. However, there is another important factor here which is the distance of nearest airport from Preston. c. By bus: Factors influencing the relative attractiveness of bus travel are: price of bus tickets, time taken by buses, and the quality of bus services. 5. Day of the week and seasonal effects: The day of the week could be an important factor. For example, if business travel is frequent on this route, then weekends may see a much lower demand. Also, Seasonal effects are likely to significantly influence demand. For example, during Christmas the demand may be ...Download file to see next pagesRead More
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