In the UK, bus journeys outside London have fallen by nearly 40% since 1980. This fall in demand has been largely due to a rise in bus fares, a rise in income and changes in the price and quality of substitutes. On some routes there are monopolies operating and this lack of competition can push up the price. (a)

Define a substitute and give an example.

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Business

Jerry

14 March, 19:25

In the UK, bus journeys outside London have fallen by nearly 40% since 1980. This fall in demand has been largely due to a rise in bus fares, a rise in income and changes in the price and quality of substitutes. On some routes there are monopolies operating and this lack of competition can push up the price. (a)

Define a substitute and give an example.

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Sabine · Answer 1

Substitute products of a product X are defined as ones that serve the similar purpose as product X. The demand for X and its substitute products have negative correlation. So that if any other factors do not change and the substitute products are improved with better price or quantity, the demand for these substitute would increase while the demand for X would decrease.

So in this case, substitute of bus journeys service can be services for people to commute / travel or even vehicles.

Example of services to provide means of transports could be subway, taxi or tram.

Example of vehicles can be personal motorbike, car.