Micro economic problems of tourism sector in Pakistan. Subject: Micro economics Topic: Problems of Micro Economics Sector: Tourism Class: MBA/BBA

1. Project
Micro Economic Problem of
Tourism
Micro Economics is the study of individual units of
economy like
• Consumer
• Firm
• Factors of production
Micro economics is also called price theory.

2. Zairat-E-Pakistan
Tour Routes
Lahore - Naran
Naran - Chilas
Chilas - Gilgit
Gilgit - Hunza
Hunza - Sosat
Sosat - Khunjrab
Pass

3. Data of Last 3 Years
In 2014
900 tourists were registered at that time they have only 3
guides. They covered 900 tourists in 3 months.
In 2015
1700 tourists were registered at that time they have only 4
guides. They covered 1700 tourists in 3 months.
In 2016
2000 tourists were registered at that time they have only 3
guides. They covered 2000 tourists in 5 months.

4. Articles of Company
In the articles of company it is clearly
mention that,
• 1 guide can cover tour of 12 tourists.
• 2 guides can cover tour of 30
tourists.
• 3 guides can cover tour of 60
tourists.
• 4 guides can cover tour of 100

5. Factors of Tour
• Weather
• Fixed Route
• Guide
• Equal reward
• Homogenous units of guides

6. Economic Problem
• More tourists.
• Shortage of guides.
• Paying Maximum cost.
If we see it as economic problem point
of view when we increase the guides
then we cover more tourists and
average tourists also increases. And
average cost decreases.

7. Law Of Increasing Return/
(Law of Diminishing Cost)
Other things remaining the same,
When additional units of variable
factors of production are applied on
fixed factors of production, total
production increase at increasing
rate is known as law of increasing
return.

8. Table
F.F.O.P
(Route)
V.F.O.P
(Guide)
T.P
(Tourists)
M.P A.P M.C A.C
Lhr - Khun 1 (5000/-) 12 12 12 416.66 416.66
Lhr - Khun 2 (5000/-) 30 18 15 277.77 333.33
Lhr - Khun 3 (5000/-) 60 30 20 166.66 250
Lhr - Khun 4 (5000/-) 100 40 25 125 200
Lhr - Khun 5 (5000/-) 150 50 30 100 166.66
F.F.O.P= Fixed factor of production
V.F.O.P= Variable factor of production
T.P= Total Product
M.P= Marginal Product
A.P= Average Product
M.C= Marginal Cost
A.C= Average Cost
M.P= Change in total
Product
A.P= T.P/Units
M.C= P.U.C/M.P
A.C= P.U.C/AP

9. Graphs
Graph of MP Graph of AP
Guides Guides
MP AP

10. Graph of MP & AP
AP
MPMP
AP
Guides

11. Graph of MC & AC
MC
MC
AC
AC
Variable factor of production