Answer to Question #75854 in Economics of Enterprise for John

Question

In the market for air travel, which of the following variables would decrease demand, ceteris paribus?
a) An increase in rental rates for hired cars, a substitute.
b) A rise in income of tourists.
c) A rise in the price of air travel.
d) A rise in the price of hotel accommodation, a complement.

Answer 1

In the market for air travel, a rise in the price of hotel accommodation, which is a complement, would decrease demand, for air travel.
So, the correct answer is
d) A rise in the price of hotel accommodation, a complement.