Friday, 10 November 2017

Chapter 3 - Elasticity of Demand and Supply




CASE STUDY 3.1

1.      Pulse Feel: Based on article, meaning of the term is the instinct that flash out from mind to react something based on the current situation. For example from the article, `but the pulse feel that may sometimes guide people to what turns out to be a correct hunch’.

Gut Reaction: Based on article, meaning of the term is the action taken by someone and give positive results to others. For example from the article, `but his gut reaction to the situation guided him to a policy so sucessful that he was invited in prestigious universities at home and abroad to explain the miracle’.

2.      The policy the ministry implemented prove so sucessful because the minister advise about streamlining of the labour force and raising railway fares and freights as apparent remedial actions. At the same time, he indeed surprised all and sundry doing just the opposite, railways lowered fares and freights across the board and did not resort to retrenchment of the work force.

3.      The nature of price elasticity of rail transport in India in the light of the above experience about the miracle is when indian railways had been in the red over the decades, not even able to pay the low dividend to the central government. The minister of railways surprised all and sundry that railway lowered fares and freights across the board. The result, Indian railways cleared their accumulated dividend debt to the government. The minister probably knew what elasticity of demand was about. The demand of railways service are increase, so the minister is looking forward that price must be lower so that they can clear the debt which is get from the income that increasing. (Price decrease, Quantity Demand increase)


Source: Zubair Hassan (2015). Economics With Islamic Orientation, Selangor: Oxford Fajar Sdn. Bhd.






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