Many more people travel by aeroplane today than 10 years ago. With the help of demands and supply diagram, explain what might have happened in the market for air travel to cause this increase.
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In order for the amount of air travel to rise, supply must rise, demand must rise, or both. It is most likely that the increase in air travel over the last 10 years has been caused more by an increase in demand than an increase in supply.
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The Law of Demand states that as demand increases, prices decrease. Price decreases also have the same impact on demand. The decrease in prices leads to an increase in demand according to the law. So the increase in demand could be related to price declines in the industry. A number of factors could cause prices to decline..
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