Question

You are in the airline business. The price of oil just doubled. How will this most likely affect the price of your airline tickets?

Answer 1

The answer is: It will increase the price of tickets.

The production costs are one of the determinants of supply, which in turn is defined as the amount of a certain product or service that a producer is willing to offer at a given price.

There is a positive relationship between costs and price. The higher the costs (in this case, the costs of production have increased due to the more expensive oil price that is an essential input in the industry), the higher the price at which the company would be willing to commercialize its product (in this case, a flight ticket).

Answer 2

It will raise the amount of your airlinr tickets because oil cost more and air planes use more oil