Since the equilibrium quantity of seats is 1600 and the federal authorities limit the number of passengers to 1200, this means that the restriction on the number of flights will cause a decrease in the quantity of seats available.
To illustrate this restriction on the graph, draw a horizontal line at the quantity of 1200 on the quantity axis. This line will intersect with the demand curve at a specific price level, which will represent the new market price for seats considering the restriction.
Label this line as 'Restriction' to identify it as the line representing the limitation imposed by federal authorities.
the market price for seats is $400.
the equilibrium quantity of seats is 1600.
Now suppose that federal authorities limit the number of flights between the two cities to ensure that no more than 1,200 passengers can be flown.
Part 5
Using the line drawing tool,
illustrate this restriction on the graph at right. Label this line 'Restriction'.
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3 answers
Remember, federal authorities have limited the number of flights between the two cities to ensure that no more than 1,200 passengers can be flown.
There is no variation in the quantity.
There is no variation in the quantity.
Apologies for the confusion. If the quantity of seats remains constant at 1600, regardless of the restriction, then there is no need to draw a separate line on the graph. The equilibrium quantity of seats will still be represented by the intersection of the demand and supply curves.
1 answer