Answer to Question #316346 in Economics of Enterprise for ROBERT MUSAKA

Question

Briefly explain how a hike in fuel prices would affect your business costs, sales, competitiveness, and profit. Use one paragraph

Answer 1

The increase in fuel prices will result in a large increase in fare prices in proportion to the increase in fuel prices. When costs grow, clients [passengers] will have a tendency to cut back due to the high expense of travel. The travel industry's competitiveness will suffer, and profit margins will suffer as a result.