Ceteris paribus, if negotiations lead to lower wages for airline employees, what will be the result in the market for air travel?
A)an increase in equilibrium price and an increase in equilibrium quantity
B)an increase in equilibrium price and a decrease in equilibrium quantity
C)a decrease in equilibrium price and an increase in equilibrium quantity
D)a decrease in equilibrium price and a decrease in equilibrium quantity

Question

Ceteris paribus, if negotiations lead to lower wages for airline employees, what will be the result in the market for air travel?
A)​an increase in equilibrium price and an increase in equilibrium quantity
B)​an increase in equilibrium price and a decrease in equilibrium quantity
C)​a decrease in equilibrium price and an increase in equilibrium quantity
D)​a decrease in equilibrium price and a decrease in equilibrium quantity

Quizplus · Accepted Answer

Lower wages for airline employees reduce the cost of providing air travel services, leading to a supply increase. This results in a lower equilibrium price and a higher equilibrium quantity in the market for air travel.

Ceteris Paribus, If Negotiations Lead to Lower Wages for Airline