Question

The market price of airline flights increased recently. Some economists suggest that the price increased because several airlines went out of business. They believe that, in the market for flights: supply decreased. supply increased. demand decreased. demand increased.

Answer 1

The correct answer is supply decreased.

Step-by-step explanation:

Suppose the market price for airline flights increased recently. This increase in price can be either because of an increase in demand or decrease in supply. Economists suggest that price increased because several airlines went out of business.

This means that the market supply of airline flights has decreased. This decrease in the supply of flights will cause a leftward shift in the supply curve. As a result, the new supply curve will intersect the demand curve at a higher point. This will further cause an increase in the price of airline flights.