Flights to Paris are a normal good and people's incomes rise. At the same time, the price of jet fuel rises. The equilibrium price of a flight to Paris ________ and the equilibrium quantity of flights to Paris ________.

Question

Quizplus · Accepted Answer

As incomes rise, demand for normal goods like flights to Paris increases, which tends to increase both price and quantity. However, a rise in jet fuel prices increases costs for airlines, reducing supply, which tends to increase price but decrease quantity. The net effect on quantity is uncertain, but price is likely to rise.

Flights to Paris Are a Normal Good and People's Incomes