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effects of fuel cost on airline travel

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Rising jet fuel prices rently led most major US airlines to raise fares by approximately 15 %. Explain how this substantial increase in airfares would :
a) affect the demand for air travel
b) the demand for hotels
c)the demand for rental cars
d) the supply of overnight mail

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Solution Summary

Supply demand analysis as it applies to airline travel

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An increase is the price of an input shifts the supply curve backward. In this case, airlines are requiring higher prices in order to cover the additional fuel price. So each airline trip ...

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