Week Two Workshop Questions – 3203THS Tourism and Hospitality Economic Analysis

Student Name: Xia YANG Student number: S5078560

Workshop Questions (please attempt these before coming to class)

1. Explain the concept of opportunity cost in your own words.

Opportunity cost is the loss of potential benefits of giving up the other alternative when one
alternative is chosen, particularly in a process of economic decision-making. As a
commercial business, when they produce a commodity with a certain amount of time and
resources, opportunity cost for them refers to the loss of opportunity to use these resources
to produce another best alternatives.

In real life, some opportunity costs can be measured in terms of money. For example, when
farmers own more land, they cannot choose to grow bananas if they choose to grow
strawberry. The opportunity cost of growing strawberry is to give up the benefits of growing
bananas.

2. Give an example of the opportunity cost to Tokyo of hosting the Olympics in 2020.

For government, the expenditure on constructing temporary sports venue for 2020
Olympics could have been used for constructing a new railway, in order to enhance social
development and improving people’s wellbeing. Government initiatives (flood mitigation).

3. Give an example of the opportunity cost to you of coming to university to study this
program. Why did you make this decision?

The opportunity cost for coming to university to study this program is enjoying the pleasant
time from checking out on my phone at home. I made this decision as I need to pass my
course and get my degree in order to find a job.

4. What is an industry?

An industry refers to a group of companies are related as they produce similar products,
based on their primary business activities. Industries are generally categorised based on a
standard industrial classification (e.g. ANZSIC), for example, tourism industry and
engineering industry are in two different categories.

5. Explain the difference between a supply side definition and a demand side definition.

Supply-side is based on the organisation itself.

Supply-side describes the motivation and desire of the industry itself to produce goods and
services. It aims at making sure the industries and markets more efficiently and contribute
to the economic growth. For example, supply-side focuses on taxes (National Account) and
human capital (HR industry). You create more products, make those products more
accessible to the consumers, and then they are more likely to invest in the economy. The
demand-side refers to the consumers and their desire on purchasing and consumption of
the goods and services. For example, the transport industry as there are demand of people
wanting to go from one place to another more quickly.

6. What goods and services to tourists consume?

The goods that tourists consume can be from local shop(souvenir), restaurant(food),
transportation (motorcycle, car rental). The tourism services include services provided by
restaurant (catering), hotels, travel agencies and other tour operator services.

Reflection

For the next week’s lecture, I am expecting a further explanation or understanding of the
theory of supply-side and demand-side, and more real life examples.

Discussion Questions (these are for discussion in the workshop)

1. Why is tourism different from other industries?

Tourism consists of a wide variety of sectors that provide diverse products and services to visitors,
such as restaurant, entertainment, and accommodations.

Tourism products is likely to be intangible, such as services that cannot be standardised.

Tourism is a social phenomenon rather than economic one, and it is based on consumption by a
particular group (tourists)

2. Which divisions of the ANZSIC does tourism activity fall into?

D. electricity, gas, water and waste services

E. construction

F. retail trade

H. accommodation and food services

3. How would you measure the output of the restaurant and café sector?
ABS would ask firms categorised into the relevant sub-sub-division to report their output (supply-
side)

4. So how could we measure the output of the tourism industry?

Services cannot be traded or sold independently of their production and consumption. Therefore,
the output for services must capture the value consumed at the moment of production.

GDP, arrivals of visitors, and tourism receipts.

Tourism expenditure (nationally)

Collect data from the demand side by asking tourists to complete a questionnaire about their
spending (demand-side)