Principle of Economics Assignment (Doc)

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Added on 2020-12-09

Principle of Economics Assignment (Doc)

Added on 2020-12-09

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Principle of Economics

Table of ContentsINTRODUCTION...........................................................................................................................11. Micro and macro economic impact of the climatic changes on the service industry.........1Travel and the tourism industry is been highly influenced by the change in the climaticconditions in the overall economy. ........................................................................................12.Building and Construction services.....................................................................................2CONCLUSION................................................................................................................................3REFERENCES ...............................................................................................................................4

Principle of Economics Assignment (Doc)_2

INTRODUCTION The present report is a brief form the minister over the effect on two of the services. Theservices taken are travel and tourism services and the building and construction services byclimatic changes. The impact is determined in aspect of micro and macro economics factors onthis services.1. Micro and macro economic impact of the climatic changes on the service industry.Travel and the tourism industry is been highly influenced by the change in the climaticconditions in the overall economy. Micro-economic impact- Due to the changes in the weather conditions the demand of thetourist gets affected to a large extent as the volatility in the weather increases the risk in terms ofthe infrastructure. It also results in increased cost, mainly in respect of the fuel which leads to thecorresponding erosion in the demand of the consumers. Climatic change results in delay and theshifts for longer term in travelling that will directly affect the destination value. For instance-heavy rainfall can lead to floods and indirectly affects the travel and the tourism industry as thedemand of the customer for travel reduces (Argy, 2013). The prices of the packages also getsaffected to a great extent as the services of this industry depends upon the climate and theholiday. Favourable climate and in holiday time, the prices for the services provided by theindustry is high while in off season, the prices are low with the discount offers. Macroeconomic Impact- the gross domestic product of the economy gets highly affectedas the climatic changes poses the risk to the future growth in the economy and also to politicalstability of the countries, this leads to a reduction in the GDP (Cross and Poon, 2016).Moreover, due to this decline in the GDP because of the climatic changes results in reduction ofthe discretionary wealth of the consumers in tourism sector. This reflects the negativeimplications in anticipating the future growth of this sector. Any decline in GDP, affects majorlythe government spending and the personal consumption in the travel sector. For improving theGDP, the prices imposed will be higher in the market which leads to inflation and because of theinflation the purchasing power and the spending of the customers reduces (Chowdhury, 2017).This affects the profitability and the revenue of the travel sector as people will not prefer to gofor trips. 1

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Principle of Economics Assignment (Doc)