Macroeconomics for Turbotrain Grande Vitesse- myassignmenthelp

Question: Discuss about theMacroeconomics for Turbotrain Grande Vitesse. Answer: Under the concept of consumer behavior, two goods can be used as substitute if they can fulfill the same utility of a consumer. Hence, a consumer has option to choose any one product among all alternative ones (Furrer et al., 2016). If the price of one commodity increases, the demand of its substitute good increases, as well. Air travel is used to move from one place to another within short time. High-speed rail (HSR) services are used as substitute to air travel. Some instances of well-known HSR services are Shinkansen in Japan, Turbotrain Grande Vitesse in France and Intercity-Express in Germany (Albalate, Bel Fageda, 2015). People can choose any one mode of transportation, as both offers high-speed transport facility. Increasing fare of air transport can decrease its demand, which in turn can increase the demand for high-speed rail. The concept of complementary good has occurred, when two goods are consumed in conjunction. Hence, by consuming a product individually, a consumer cannot receive any utility (Hecking Panke, 2015). Thus, increase in price of one product can decrease the demand of its associated product while the opposite reaction can also be occurred if the price of one commodity increases. The chief complementary good for regular air travel is petrol (Mattioli Anable, 2017). Hence, the price of air ticket can be increased if the petrol price has increased significantly, which in turn can decrease the demand of air travel. Figure 1: Impact of complementary price increase Source: (created by author) In the above figure, petrol price has decreased by P0 P1 unit, which in turn has helped an airline company to buy more petrol at lower price. Hence, the price of airline ticket can decrease which further can increase the demand of air travel. The shifting of airtravel demand curve from D0 to D1 represents this phenomenon. References: Albalate, D., Bel, G., Fageda, X. (2015). Competition and cooperation between high-speed rail and air transportation services in Europe.Journal of transport geography,42, 166-174. Furrer, M. A., Roth, B., Kiss, B., Nguyen, D. P., Boxler, S., Burkhard, F. C., ... Studer, U. E. (2016). Patients with an orthotopic low pressure bladder substitute enjoy long-term good function.The Journal of urology,196(4), 1172-1180. Hecking, H., Panke, T. (2015). The global markets for coking coal and iron oreComplementary goods, integrated mining companies and strategic behavior.Energy Economics,52, 26-38. Mattioli, G., Anable, J. (2017). Gross polluters for food shopping travel: An activity-based typology.Travel Behaviour and Society,6, 19-31.