Tourism and Economic Development Issues - Tourism and Development: Concepts and Issues - page 117

where
K(t) . . . capital over time t
Y(t) . . . produced output (gross national product GNP) over time t .
(4) The marginal capital-output ratio

θ is calculated as follows:

θ = Δ K(t) / Δ Y(t)

where

Δ K(t) . . . change in capital over time t

Y(t) . . . change in produced output (gross national product (GNP)) over time t .
(5) The multiplier value (M) depends on the change in total output (

Δ

Δ Y) and the initial

change in expenditure ( E) and, as shown by the equations below, a higher multiplier

means a higher economic growth rate (y):

Δ

Δ
Δ

Y
E

M

=

Δ Y

Y

YM E y ME
Y

∗ Δ

y = ; Δ = Δ ⇒ =

*

(6) The premium in price (with fixed supply also known as tourism rent) refers to the
valuation value (VV) which is the value placed on a tourism product by a tourist
because of increased demand due to the destination's attractiveness (environmental,
cultural, etc.):

P = C + PF + VV

where

P . . . the price of the tourism product;

C . . . costs of the tourism product;

PF . . . profit (a 'normal' return on the capital involved);

VV . . . valuation value (tourism rent).