Business Economics

SECTION – B

TC = 480 +10Q

TR= 50Q

SECTION – C

b) Measure the price elasticity of demand by Total Outlay method.

SECTION – D

The ‘Coconut Lagoon’ was one of the earliest projects to be implemented in Kumarakom in the Kottayam district, undertaken by one of the oldest promoter groups in Kerala, the local Casino Group. At the time of implementation, the surrounding community was largely rural, dependant on their farms and on fishing for livelihood. The community was poor and many local farmers were on the verge of selling their farms and moving out. The project was implemented at a cost of around Rs.3.50 crore, almost entirely utilizing local resources, including materials and labour from the local community, which implied that the major component of the project cost flowed into the village as income, creating trade and employment opportunities for the people. After implementation, the 50-room Coconut Lagoon Resort directly employed around 90 people, all from the local community. The indirect benefit of the project extended much further, touching the lives of many in the local village. The Coconut Lagoon was essentially an ecotourism/rural tourism project based on active experience of nature and culture by the tourist. Community participation was an essential aspect of this experience. The tourists who stayed in the Coconut Lagoon resort were taken to visit the local spice farms. Tourists would pay the farmer around Rs.50 a day for a day’s experience and would also buy products from the farm. The farmer, who would receive at least around 20 tourists a day, would earn around Rs 1,000 which he would invest in his farm, thus upgrading productivity.

The real impact of the project can be gauged by the fact that one of the farmers gradually improved his livelihood to such an extent that he built two small cottages and today rents them to tourists as guesthouses. His ‘home-stay’ resort is called ‘Philipkutty’s Farm’. In addition to local farmers, the fishermen also benefited because their boats and services were used for cruises and boat-rides on the backwater lagoons. Employment was created for local guides and taxi operators too. Today, 10 years since the implementation of the Coconut Lagoon project, Kumarakom is one of the hottest destinations, with around two heritage hotels and three-star hotels, a combined room capacity of more than 200, in addition to four ‘home-stays’, the bed and breakfast homes of the local farmers. The whole of Kumarakom is involved either directly or indirectly in the tourism activity of the region. The economic impact is reflected in the real estate value escalation. This has shown a 50-times escalation in value over a 12-year period. In 1992, the cost of 10 acres of land was Rs. 10 lakh that increased to Rs.50 Lakh per acre in 2004.

Questions:

1. Explain the economic impact the project has on the rural economy.

b. State what products and services were in demand as a result of the implementation of the project.  Also state the elasticity of demand for the mentioned products and services.

(5+10)