11485 The tourism Tourism System

Maria Tugores
HOMEWORK 1
Due date: 17 th of October

1. Are the following statements true or false? Justify each of your answers.

a. If a Swedish tourist travels to Norway, it is counted as National Tourism in Sweden.

b. If a German travels to Greece for 6 months because he is writing a tourist guide of

that country, he is considered an international inbound tourist in Germany..

c. The internal tourism of a country is always inferior to the national tourism of the
same country.

d. If a Spanish women travels to Japan it is at the same time international tourism,

outbound tourism and national tourism in Spain.

e. A visitor can be a tourist or excursionist depending on the reason for your trip.

2. Give a concrete example of economic, social and environmental impact, both positive
and negative, referring to a specific mass tourism activity and to an adventure tourism
activity. Justify your answer.

3. Determine which of the following sectors of economic activity are considered by the
WTO (World Tourism Organization) as “tourism sectors”:

a. Bookshop

b. Boat rental company

c. Company specialized in the organization of sport events: marathons, popular races

…

d. Travel agency

e. Urban hotel

f. Zara shop in the center of Palma

g. Restaurant in the Campus of the UIB

h. Air line company

i. Natural history museum

j. Art Gallery

Do you think that this classification of tourism sectors underestimate or overestimate the
tourism activity of a given region?
4. Consider a beach where there is a house built in the front row, another in the second
and still another in the third row. There are N tourists who prefer to spend their holidays
by renting a house to not renting, but their satisfaction does not increase by owning two.
All of them prefer the front row to the rest and all of them are indifferent between the
second and the third row.

a. Describe the consumption set and the individual’s preferences ordering . How
many bundles does it contain? Compare all this bundles.

b. Determine some of the properties of preferences: are they complete, transitive,

and/or strictly monotonic?

5. Parts a) through d) represent different possible indifference curves. For each, find the
MRSxy and graph the indifference curves. Assume x represents the first good (and is on
the x-axis) and Y represents the second good consumed (and is on the y-axis).

a. U(X,Y)=X+bY

b. U(X,Y)=X1/2 ·Y1/2

c. U(X,Y)=min[4X,9Y]

d. U(X,Y)=X1/2+Y1/2

Do some of them represent the same preferences?

6. The utility function of Mrs. Bell is given by the expression u=min{x 1, 3x2}, with x1 and x2
are consumption goods with prices p1 and p2, equal to 2. Mrs. Bell’s income equals
2400 euros.

a. Find the marshallian demand functions of these two goods.

b. Calculate the optimum consumption bundle.

c. Are these goods normal or inferior? Justify your answer.

d. Give an example of two goods of this type in the tourism transport or

accommodation sector.

7. Assume that the utility function of an individual is U(X,Y)=X 0.6·Y0.4

a. Find the Marshallian demand functions.

b. Find the optimal bundle of consumption when p X=10 and pY=20, and m=100.

c. If pX increases to pX’=20, find the total effect.

d. Represent graphically the budget shift associated to that change.

8. A consumer of two goods faces positive prices and has a positive income. Her utility
function is: u(x1,x2)=x2+6. Draw her indifference map and derive the Marshallian demand
functions. Which type of good is x1? Think on an example belonging to the tourism
sector.

9. Samantha considers cinema and theatre to be perfect substitutes. She spends 50 Euros
a month on these entertainment and cultural activities. Initially, cinema cost 5 Euros per
session and theatre cost 6.25 Euros per session.

a. Find the Marshallian demand and the optimal choice of these two goods.

b. Then, the price of cinema increases to 7.50 Euros per session. Her income
allocated to cultural and recreational activities does not change, however. How
does consumption change when the price of cinema changes?

c. Show with the aid of a graph how utility changes when the price changes.

10. Define an inferior and a normal good. Can a good be both inferior and normal? Explain it
using an accommodation industry example and depict its Engel curve. Think in one
example complement goods and another example of substitutes belonging to the
tourism food and beverage industry.