The question is based on the Mintel report relating to the market for overseas holidays booked via travel agents in the UK. You can read the whole report but the three important sections are the executive summary, the internal market environment, and the external market environment.
The four parts of the question are:
a) What has happened to demand (sales) of holidays in the period 2005 – 2009? Provide a quantitative estimate. What has happened to prices? What has happened to the revenues of sellers? (Sometimes we call this \”volume\” sales and \”value\” sales – in exactly the same way as in macro we distinguish between \’real\’ and \’nominal\’ magnitudes)
b) What is a \’staycation\’? Why have they become more popular? Why is the concept of cross-price elasticity of demand important? What determines relative price of staycations and vacations?
c)How can you use the concept of income elasticity of demand to explain the effect of the recession on the demand for holidays?
d) What sort of market structure exists in the market for package holidays? There has been some merger activity in recent years. What is the rationale for this? And what has this got to do with costs? What sort of costs are relevant? Fixed? Variable?
Theoretical background and relevant knowledge (40%): Answer shows good command of economic concepts and theories. There is strong research, including concrete examples drawn from the Mintel report.
Analysis and Argument (50%): Answer shows appropriate application of economic concepts and theories. It includes coherent arguments supported by relevant examples. The answer is critical in nature, clearly showing pros and cons of the analysed situations.
Presentation and Style (10%): Answer is written in clear and coherent English. It has been properly edited and proofread. It is clearly structured. It is presented in a clear and professional format. Work follows Harvard referencing system.