Executive Summary :: Economics

Executive SummaryThis traverse will look for alternating(a) modalitys in which the capital of the United KingdomUnderground potentiometer change their prices in order to reduce their loss interms of total revenue. The report will both identify and analysethese alternative rules in an hear to find the approximately suitable wayof increasing the revenue for the London Underground. The report willalso look at how elasticity plays a key role in determining anydecisions as easy as the outcome of these decisions made.The London Underground is at this very time running at a loss and isin urgent acquire of things being turned around. The London Undergroundmay at superstar point in the future be privatised. What we need todetermine is how we can increase revenue before it floats so thatpotential sh atomic number 18holders will be attracted. We must satisfy how prices canbe adjusted in co-occurrence with the market segments so that revenuecan be increased. pliableity is authori tative in our thinking as it can let a biggish impact.1.1 DEFINITION OF ELASTICITYElasticity is the concept in economics that stairs theresponsiveness of one variable in response to another variable. Thebest measure of this responsiveness is the proportionate or percentchange in the variables. This gives the most usable results for anytype or range of data. Thus elasticity is the proportional (orpercent) change in one variable relative to the proportional change inanother variable.The general formula for elasticity isE = percent change in x / percent change in y1.12 DIFFERENCE BETWEEN ELASTIC AND INELASTIC DEMANDElastic sum something is highly responsive to changes in somethingelse. For example, elastic demand sum that the quantity demandedchanges a lot when the price changes. Inelastic demand means that thequantity demanded does not change much when the price changes.2.0 WAYS IN WHICH FARES CAN BE ADJUSTED2.01 OPTION 1One way of adjusting prices can be to decrease the fares fo r students.Students often use this service as a means of transference to get totheir respective universities. If fare prices are lower, even thoughthe income per ticket is less, it may overall increase gross revenue revenue.Other discounts may also be offered if a quarterly or seasonally trainpass was purchased, which would attract student to this service.2.02 OPTION 2Fare prices can be increased because many quite a little see this service asinelastic as they do not have any other means of transport. A lot ofbusiness people use this service and may well be able to contribute to paythe extra cost. However this is a very risky method as it mayencourage people to use private transport which may take the business