MAC3702 TL202 S2 2014

Please choose from one (1) of the scenarios below. Note: The scenario that you choose in this assignment will be the one (1) with which you continue for Assignment 2.

Problems #65 - #94 from page 311. Please provide your answer after each problem and submit the file with your answers through Blackboard.

There has been a major decline in the travel and tourism sector in Cyprus. A 2.4% overall decrease in arrivals were recorded last month compared to the same month in 2009 and a decrease of 10.2% was recorded in arrivals from the UK for the year – suggesting that Cyprus is beginning to become a less popular holiday destination for the British; one of Cyprus' main markets.

The number of trips taken by Britons overseas has declined by 12.6 million, from 69.4 million to 56.8 million between 2007 and 2011, according to the research by Travelodge. This means that 5.9 million holidays and trips have come out of the market altogether when the number of domestic holidays and trips are factored in. This is shy of the government’s stated ambition for domestic trips to replace the number of missing overseas trips, the report says. However, the analysis shows that ‘staycation’ breaks were up by 5.6% as the recession proved that holidays are an essential rather than a luxury. UK city breaks account for 23% of domestic tourism but seaside towns are in decline by 5%. Total tourism revenue was up 12.6% to £40 billion between 2007-2011 against the general economy up 8%. Employment numbers in tourism have bucked the wider trend, thanks to strong growth in 2011 when 120,000 new jobs were created. The UK’s appeal as a tourist destination endured during the double dip, with overall visitor numbers up by 3.1% to 157.4 million, the report shows. Staycations form the backbone of the tourism economy, with domestic trips and holidays increasing by 5.6% to 126.6 million.

in completing this assignment. The work submitted is original work specific for this course. If

Problems like the following will be included on the final exam. Your instructor may indicate

This paper forms 60% of the assessment in this course. This paper may be retained by the candidate.

purpose was not achieved, prove this by the results in a similar fashion. Relate the results to

For partial credit, formulas and work, appropriately labeled, must be shown. There is no partial credit for multiple choice or true/false questions.

| * Recent international Economic recession * Customers reluctant to travel due to increased gas prices * Decreased leisure spending

Drivers realize that the price of gas is tied to the market value of crude oil, and has a direct impact to their daily commutes, errands, and vacations. However the reality is that the price of fuel has implications much grater than most consumers realize. Fuel prices affect nearly everything we purchase. For example, the price of farm commodities and food increase because farmers pay more for the fuel for their farm equipment and trucking firms pay more for fuel to get the commodities to market. These shipping “fuel surcharges” impact all goods

Financial risks include the short payback period. A 3-year payback period would not allow Hansson the opportunity to breakeven. With a negative NPV in the first 3 years Hansson’s decision to invest in the project would be based on his ability to negotiate a longer contract time. The Net Present Value (NPV) would have to be examined in tandem with the other non-financial variables.

Brief solution of all problems that is indicated to be occur will be made in advance.

High income households have not changed their choice of holiday destination. Instead, they have reduced the duration of their holiday. All other factors have remained constant as households are unwilling to compromise on the features of their holiday. Their demand for overseas travel is income inelastic. The analysis also showed the possibility of overseas travel being a Veblen good for the upper end of the high income group, where it is used as a status symbol to show that the household is unaffected by the recession.

3. This question paper consists of TWO (2) sections; Section A and section B. Answer ALL