Question

There are train and bus services between New Delhi and Lucknow. If the bus fare between the two cities comes down, how will it affect the demand curve for train travel between the two citites?

Options

• Demand curve will shift leftward for train travel

• Demand curve will shift rightward for train travel

• Demand curve will move upward for train travel

• Demand curve will move downward for train travel

Answer 1

Demand curve will shift leftward for train travel

Explanation:

Train and bus services are substitute goods; therefore, commuters can simply transfer from one form of travel to another based on cost. When bus fares fall, bus travel becomes more affordable, encouraging customers to migrate from trains to buses. This overall loss in train preferences causes a decrease in demand, leading the train travel demand curve to the left.