Question

What is the expected impact of increased security measures imposed by the federal government on airlines and consumers? Instructions: Draw a parallel shift in the demand and supply curves by grabbing, dragging, and then dropping the curves to the new positions.

Answer 1

Answer:

It will increase price for consumers, as well as cost for airlines (due to increased demand & supply)

Explanation:

Markets are at equilibrium when market demand = market supply.  

If federal government imposes more safety measures on airlines & consumers. Cost for airlines rise due to increased security expenditures, so supply decreases (shifts leftwards). Customers might feel safer amidst more personal & organisational security measures, so demand increases (shifts rightwards).

Both these factors lead to increase price for consumers, as well as cost for airlines