(a) The tourism sector is an important sector in the Singapore. Recently two incidents 1 occurred in the Singapore tourism industry. One incident is that there are more and more tourist attractions, such as the Gardens by the Bay, the Maritime Museum and the Marine Life Park. The other incident is the greater restriction imposed by the Singapore government for firms to employ foreign labour, Where many of them are working in the tourism industry.
Analyse the effects on the tourism industry in Singapore when these two (2) incidents occurred simultaneously. Use suitable demand-supply diagrams to support your analysis.
(b) The seller of Good A and Good B discovered that the number of units sold for Good A is affected by the price of Good B. When he sets the price of Good B at $5 per unit, he can sell 1200 units of Good A. However, when the price of Good B becomes $6,he can only sell 1000 units of Good A.
Calculate the cross elasticity of demand between Good A and B and explain their
relationship. What should the seller do to the price of Good B if he wants to earn more revenue from Good A? What should the seller do to the price of Good A if he wants to earn more revenue from Good A? Explain.
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