Assume that airline tickets are a normal good.Prices of commercial airline tickets have fallen in recent months.Over this same period,the price of jet fuel has risen and consumer incomes have fallen.Which of the following best explains the falling prices of airline tickets?
A)The supply curve for airline tickets has shifted to the left while the demand curve for airline tickets has shifted to the right.
B)The demand curve for airline tickets has shifted to the left more than the supply curve has shifted to the left.
C)The demand curve and the supply curve for airline tickets have both shifted to the right.
D)The supply curve for airline tickets has shifted to the left more than the demand curve has shifted to the left.

Question

Quizplus · Accepted Answer

Since airline tickets are a normal good, a decrease in consumer income would lead to a decrease in demand for airline tickets, shifting the demand curve to the left. Additionally, an increase in jet fuel prices would increase the cost of production for airlines, shifting the supply curve to the left. However, the fact that airline ticket prices have fallen suggests that the decrease in demand may have been more significant than the decrease in supply, leading to a surplus of airline tickets and a downward pressure on prices. Therefore, the demand curve for airline tickets has likely shifted to the left more than the supply curve has shifted to the left.

Assume That Airline Tickets Are a Normal Good