Question

1. What would be the impact on a decrease in the number of air carriers in...

1. What would be the impact on a decrease in the number of air carriers in the market for air travel?

A. Increase in price and increase in quantity

B. Increase price, decrease quantity

C. Decrease price, increase quantity

D. Decrease price, Decrease quantity

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Answer #1

Answer: As the number of air carriers decreases, the air travel companies would now able to supply less air travel to the passengers. As a result the supply of air travel decreases and the supply of air travel curve shifts to the left (upward). As a result, the price for air travel increases and quantity decreases.

Picture Explanation: In the attached picture below, the initial price and quantity is P0 and Q0. When the supply shifts to left, the price rises and quantity falls.

So, the correct option is: (B) Increase in price and decrease in quantity.

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