Homework answers / question archive / Consider the market for airlines and assume that it is a perfectly competitive market

Consider the market for airlines and assume that it is a perfectly competitive market

Economics

Share With

Consider the market for airlines and assume that it is a perfectly competitive market. Assume the U.S. domestic market is currently at equilibrium with a total of 642 million ticketed passengers per year at a price of $$375 per ticket. Suppose a study is released that documents large negative health effects of increased exposure to radiation from flying. In addition, suppose there is a sudden increase in the price of jet fuel. If demand is elastic, is the total revenue higher or lower?