Saturday, September 22, 2018

5 Concept of Economics, Applied by Indian Rail

1.    Principle of demand
Indian Railways provide “Tatkal ticket”. It is provided only day before the journey. The demand of “Tatkal ticket” always remains high. So Indian Railways charge extra money for “Tatkal ticket”. By doing this Indian Railways generate more revenue.
2.    Economies of scale
Company or industries try to increase their production or output so they can decrease their fixed cost.
Example: Indian Railways always try to carry huge number of traveler so that the fixed cost like electricity cost, diesel cost, salary of loco pilot etc. decrease per customer.
3.    Market/ Segment based price discrimination
This type of price discrimination was created for targeting a particular segment or group.
Example: Indian Railways offer special discount on ticket for senior citizen. They do this for targeting and attracting more senior citizen traveler.
4.    Economics of scope
Economies of scope occur when products share common inputs and diversification leads to cost savings.
Example: IRCTC is a subsidiary of Indian Railways. Previously it offers catering service only for Indian Rail. Now a day, they offer catering service for corporate also.
5.    Customer taste and preferences
Indian Railways offers various types of ride for various types of customer. ‘Rajdhani Express’ offers premium ride for elite customer and on the other hand, ‘Garib Rath’ offer economy ride for poor customer.

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