The September 11 terrorist attacks turned many people away from flying. The demand and supply model would predict which of the following events in the airline travel market?
A) The supply of airline travel would decrease, resulting in a higher equilibrium price and lower equilibrium quantity.
B) The supply of airline travel would increase, resulting in a lower equilibrium price and higher equilibrium quantity.
C) The demand for airline travel would decrease, resulting in a lower equilibrium price and lower equilibrium quantity.
D) The supply and demand for airline travel would decrease, resulting in a higher equilibrium price and higher equilibrium quantity.

Question

Quizplus · Accepted Answer

The September 11 attacks caused a decrease in demand for airline travel. This would lead to a decrease in equilibrium price and quantity, as fewer people are willing to pay for flights. The supply of airline travel would not necessarily change, as airlines may keep their production levels steady, while reducing prices to drive up demand.

The September 11 Terrorist Attacks Turned Many People Away from Flying