Suppose there is a reduction in consumer income and an increase in the price of jet fuel, an important resource used to produce air travel. If air travel is a normal good, how will these changes influence the price and quantity of air travel?

Question

Quizplus · Accepted Answer

A reduction in consumer income will decrease demand for air travel (since it's a normal good), leading to a potential decrease in price and quantity. An increase in jet fuel prices will increase production costs, potentially increasing price but decreasing quantity. The combined effect makes the price indeterminate but will decrease the quantity purchased.

Suppose There Is a Reduction in Consumer Income and an Increase