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How does having low airport taxes and low terminal cost affect the airline industry based on...

How does having low airport taxes and low terminal cost affect the airline industry based on the concept of supply and demand and elasticity (Please don't give a summary just need an explanation in details)

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Answer #1

When the airport taxes reduce and when there are low terminal cost the price of the flight tickets will go down. When the price of airport tickets go down the demand for those airplane tickets will go up which lead to increase in demand for flight tickets. So tariff of people who want to buy flight ticket will increase.

So when an increase or decrease in price will have a change in decrease or increase on the quantity consumed than the demand is said to be elastic in nature.

So here due cut in airport taxes and low terminal cost will reduce the cost of flight ticket and Increase the demand which shows that at these condition demand is elastic in nature.

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