nciples of Economics uiz: Week 2 Quiz 40 pts s Question: 2 pts 80120 (7 complete

Question

nciples of Economics uiz: Week 2 Quiz 40 pts s Question: 2 pts 80120 (7 complete) irline profits soar, yet no relief for passengers rplanes are more crowded than ever and fares are at a five-year high oes this news dlip imply that the law of demand doesn't work in the real world? Explain why or why not The news clip implies that the law of demand work in the real world because . 8 0 A. does not, as the price of an airline ticket rises the quantity demanded of airline tickets increases O B. does, "other things have not remained the same" as some event decreased the demand for airline travel O C. does not: as the price of an airline ticket rises the quantity demanded of airline tickets decreases 0 D. does: "other things have not remained the same" as some event must have increased the demand for airline travel 0 E. does not, economic models do not necessarily accurately predict events in the real world

Explanation / Answer

The correct choice is D

Explanation : - The law of demand states that as price increases demand decreases and when price decreases demand increases. The demand for a product is dependent on various factors such as own price, price of complements, price of substitutes, level of advertising , tastes of consumers and few more factors. Thus even though the price of airline is at a five year high, there may be other compelling factors that drive the demand for airline tickets such as passengers prefer to travel by air than other modes of transport as it saves time.

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