Question

Use the demand and supply model to predict how price and quantity will change for a round trip flight from LA to New York if the work from home culture persists after the coronavirus lockdowns end. Be sure to discuss the model, and not the coronavirus pandemic, or opinions about it.

"Each answer must be about 1 - 2 paragraphs and use economic models/term to explain your answer."

Answer 1

If the work from home culture persists then people who are natives of LA but work in New York won't have to travel much. So, demand for the flight tickets from LA to New York will decrease at each price level. This will lead to a rightward shift of the demand curve from D to D'. At given price level, this will create a surplus of flight tickets of Q -Qs. This will put downward pressure on price of flight tickets causing the pices to fall to P' from P and decrease prices wil increase the quantity demanded for tickets bringinf the effective equilibrium quantity to Q' from Q.

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