The impact on demand, supply, prices and quantity. In the market for airline tickects, airline cariers have drastically cut fares forinternational air travel resulting in 3% increase in ticket sales. Meanwhile, recent health considerations due to COVID 19 has caused 11% in reduction in overseas travel.
The impact on
c) When airlines reduce the ticket price by cutting fares, the supply must increase by 3% which means supply shift to the right from S to S1. The demand must reduce for international travel during Covid -19 which reduce overseas travel by 11% and it will shift the demand curve from D to D1. This will decrease the price from P to P1 and quantity decreases from Q to Q1 as the shift in supply is less than the shift in demand.
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