Been doing Elasticity wtih my AS class and came across a good example from the book ‘Into Thin Air” by Jon Krakauer. Remember this theory measures the responsiveness of the quantity demanded to a change in price of the good/service. Licences for climbing Everest are only a small part of the cost of such activities – for most people the largest costs concern the long periods of time they must spend awy from their families and job, not to mention the risk of death and injury. Over the last ten years the volume of people wishing to climb Everest has increased hugely and the Nepalese government realised that this had an environmental impact and created problems in terms of safety, aesthetics etc. The Nepalese government come up with a plan to limit the amount of climbers and also gain some well needed revenue.
1991 – US$2,300 for any size of team
1992 – US$10,000 for a team up to 9 climbers – US$1,900 for each additional climber.
However, climbers continued to show their face at Everest and in 1993 a record number of climbers (294) attempted to scale the peak. Later that year they changed the fee again to climb Everest
1993 – US$50,000 for a team up to 5 climbers and $10,000 for each additional climber.
However at this point demand became more elastic as the Nepalese authorities didn’t consider China only charged US15,000 to allow a team of any size to climb Everest from the Tibet side. Sure enough Everest expeditions now shifted from Nepal to Tibet, leaving hundreds of sherpas out of work. Nepalese authorities, realising this, cancelled the four-expedition limit but still increased the permit fee:
1996 – US$70,000 for up to seven climbers plus and $10,000 for each additional climber.
As 16 out of the 30 expeditions in 1997 climbed via the Nepal side, it seems that the high cost of obtaining a permit doesn’t seem to have been a notable dampner on their desire.