Answer to Question #217205 in Macroeconomics for Muhluri

Question

Consider a decrease in the demand for domestic air tickets in South Africa. If at the same time there were a rise in the cost of insurance of airline then in comparison with the original equilibrium there would be

Answer 1

The relationship that exists between quantity demanded and price I'd inverse. According to economists, this is called the law of demand. That means the quantity demanded goes down if the price goes up, but it does not affect demand itself as it remains the same. The quantity demanded increases if the price goes down. That is the reason why there was a decrease in demand for the tickets at the same time the cost of insurance was higher