Ceteris paribus, if the price of jet fuel rose, what effect would it have on 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 the price of jet fuel rose, what effect would it have on 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

If the price of jet fuel were to rise, it would increase the operating costs for airlines, which would lead to an increase in the cost of air travel for consumers. This would cause a decrease in the quantity demanded of air travel, resulting in a decrease in equilibrium quantity. At the same time, the increase in costs for airlines would shift the supply curve to the left, resulting in a higher equilibrium price. Therefore, the correct answer is B.

Ceteris Paribus, If the Price of Jet Fuel Rose, What