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?

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KollegeApply · Accepted Answer

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.

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