Wednesday, October 29, 2008

Law of demand in action

It is a familiar story that economic agents respond to changes in price of a commodity by changing quantity demanded. This is the basic law of demand formally learnt in Econ 101—that is, price and quantity demanded are inversely related.

Here is the same principle applied in the real world:

The number of climbing expeditions to Himalayan mountains, including Mount Everest, has risen since Nepal reduced off season climbing fees three months ago, officials said on Wednesday.

Nepal announced a 50 percent cut in the climbing fees in August for the three-month autumn season starting in September as incentive to off-season climbers and boost tourism, hit by years of Maoist civil war and political unrest.

As a result the number of expeditions to different Himalayan peaks in Nepal during the Autumn season had increased to 145 this year, up from 84 in 2007, Tourism Ministry official Gyanendra Shrestha said.

Officials say tourist arrivals in 2007 also jumped 27.1 percent to 360,000 as visitors began to return to the scenic nation after the Maoists declared a ceasefire in 2006.

By the way, eight of the world’s 14 highest peaks above 8,000 meters, including Mount Everest, are located in Nepal, which is the poorest country in Asia with a GDP per capita income of $1,500 (PPP 2006 estimate).