Identify effect on demand :
There are train & bus service between Ahemdabad and New Delhi. Suppose the train fare between the two cities come down , how will this affect the demand for bus travel?
Dear Students
Train and Bus are two substitute modes for travelling.
Decrease in price of Train Fare
Bus Fare remaining constant and the fares of train decreases. As a result of which a rational consumer will decide to substitute train in place of bus as a mode of travelling. Demand curve for bus will shifts to the left when price of the substitute commodity decreases as demand for buses will decrease for travelling.
Regards
Train and Bus are two substitute modes for travelling.
Decrease in price of Train Fare
Bus Fare remaining constant and the fares of train decreases. As a result of which a rational consumer will decide to substitute train in place of bus as a mode of travelling. Demand curve for bus will shifts to the left when price of the substitute commodity decreases as demand for buses will decrease for travelling.
Regards