Question
‘Both the take-up rate and number of journeys per bus pass have been falling in recent years.’
Explain two factors which could lead to an increase in the demand for bus travel in the future.
(10 marks)
Category:
Demand and Supply
AQA AS ECONOMICS November 2020
Answer
Tip: Generally, AQA exam questions are accompanied by an extract (although we have not included it here for simplicity). To score higher marks, refer back to the data (facts and figures) given in the extract, when writing your essay! Note that in this question you are asked to 'explain TWO factors'. In this case, it's a good idea to break your essay into two parts: Factor 1 and factor 2.
(Step 1: Define 'demand' in the introduction)
Demand refers to both the willingness and the ability of customers to pay a given price to buy a good or service. There are several factors which could lead to an increase in the demand for bus travel in the future.
(Step 2: Explain TWO factors which could increase the demand for bus travel)
🚌 Factor 1: A change in tastes or social norms will increase the demand for bus travel.🚌
Today, travelling by bus has the image of being unpleasant, unreliable and for the 'lower class'. However, more awareness is being raised about air pollution, climate change and Co2 emissions. People in the future may perceive bus travel as being more ecologically and economically efficient. Furthermore, with the introduction of smart lanes and electric buses, the experience of travelling by bus will improve with time. These factors will encourage people to take the bus.
If more people become aware that travelling by bus is environmentally friendly, more people will opt for bus travel to reduce their carbon footprint. The demand for bus travel will increase. The effect of an increase in demand for bus travel can be shown using a diagram. The diagram below shows the demand and supply curves of bus travel.
Initially, people are unaware of the environmental benefits of bus travel, the equilibrium price (bus fare) is P and the equilibrium quantity (number of journeys taken by bus) is Q. Following campaigns raising awareness about air pollution, more people will be encouraged to travel by bus instead of using their cars. The demand curve for bus travel shifts rightward from D to D1. The quantity demanded and supplied for bus travel increases from Q to Q1.
🚌 Factor 2: If the price of substitutes such as car travel increases, then people will turn to bus travel instead because of its more favourable relative price.🚌
Substitutes are alternative goods and can satisfy the same want or need. Examples of substitutes are car travel and bus travel. For example, if the price of car travel increases significantly, people will look for cheaper alternatives, such as bus travel.
The cost of travelling by car can increase in the future, for instance, due to higher fuel prices. Consequently, if the cost of travelling by car goes up in the future, people will avoid travelling by car, and take the bus instead. The demand for bus travel will increase.
The government may also subsidise bus travel in the future, making bus fares cheaper. This will encourage people to switch away from using their cars to travelling by bus.
(Step 3: Conclude)
To conclude, the demand for bus travel could increase in the future if people perceive busses as being more ecologically and economically efficient. Also, if the price of substitutes such as car travel increases, then people will turn to bus travel instead because of its more favourable relative price.
MARKING SCHEME
Relevant issues include:
• meaning of ‘demand’
• lower relative price and/or greater availability compared with substitute goods
• increased subsidy
• changes in tastes and/or social norms
• changes in income and/or consideration of bus travel as an inferior good
• increased population and/or changes in age structure
• the significance of elasticities.
Level 3
An answer that:
• identifies two valid factors
• shows sound knowledge and understanding of relevant economic
terminology, concepts and principles
• includes good application of relevant economic principles and/or
good use of data to support the response
• includes well-focused analysis with a clear, logical chain of
reasoning
• may include a relevant diagram to support their explanation
The above material is protected and is not to be copied.
Preview:
(Step 1: Define 'demand' in the introduction)
Demand refers to both the willingness and the ability of customers to pay a given price to buy a good or service. There are several factors which could lead to an increase in the demand for bus travel in the future.
(Step 2: Explain TWO factors which could increase the demand for bus travel)
🚌 Factor 1: A change in tastes or social norms will increase the demand for bus travel.🚌
Today, travelling by bus has the image of being unpleasant, unreliable and for the 'lower class'. However, more awareness is being raised about air pollution, climate change and Co2 emissions. People in the future may perceive bus travel as being more ecologically and economically efficient. Furthermore, with the introduction of smart lanes and electric buses, the experience of travelling by bus will improve with time. These factors will encourage people to take the bus.
If more people become aware that travelling by bus is environmentally friendly, more people will opt for bus travel to reduce their carbon footprint. The demand for bus travel will increase. The effect of an increase in demand for bus travel can be shown using a diagram. The diagram below shows the demand and supply curves of bus travel.
(Diagram given in full essay!)
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