Romanian Government

1638 Words Jun 25th, 2018 7 Pages
Introduction
This report targets the Romanian Government and it examines the positive and negative aspects of the free admission to museums policy which is considered to be implemented in this country. The main focus of this report is on how an increase in the demand for museum tickets will boost the economy of Romania, by allowing people to visit museums for free. Throughout the report, other examples of other countries such as the United Kingdom and Sweden will be used in order to explain how free admission to museums will have a positive impact on Romania as well.

Economic functioning of the museum market, museum visitor statistics and demographic pattern for museum visits
A very important factor in the market is the price mechanism:
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The museum tickets demand for people from lower socio-economic groups is elastic, because demand for merit/luxury goods is directly related to their income. People from higher class groups can afford merit goods and thus museum visits due to their increased income. Their demand for museum tickets is inelastic. For them, museums would be normal goods instead of luxury ones, as for them it would not be an effort to purchase museum tickets.
Cross-price elasticity of demand is the responsiveness of demand for one good to a change in the price of another (Sloman and Jones 53):
• Substitute goods, or a pair of goods which are considered by consumers to be alternatives to each other. As the price of one goes up, the demand for the other rises (Sloman and Jones 35). For example, if the price of museum tickets goes up, people would find easier to choose substitute goods such as amusement parks, cinemas or theatres.
• Complementary goods, or a pair of goods consumed together. As the price of one goes up, the demand for both goods will fall. (Sloman and Jones 35) If the price of museum tickets would be lowered, or if the free admission scheme is implemented, then people would very likely go to museums and buy goods that go well with their museum visits, such as personalised post cards, souvenirs, posters, books etc. However, if the price of museum tickets rises, then demand for complementary goods decreases.
Income elasticity of demand is the responsiveness
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