Prices of commercial airline tickets (assume that this is a normal good)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

The rise in jet fuel prices and fall in consumer incomes are both factors that would shift the demand curve for airline tickets to the left, causing a decrease in quantity demanded and a decrease in price. However, the fact that the prices of airline tickets have fallen suggests that the supply curve for airline tickets has shifted to the right, causing an increase in quantity supplied and a decrease in price. The fact that the price of jet fuel has risen would normally shift the supply curve for airline tickets to the left, but the supply curve has shifted to the right more than the demand curve has shifted to the left, resulting in falling prices. Therefore, option B is the best answer.

Prices of Commercial Airline Tickets (Assume That This Is a Normal