4. Change in Government Regulation (Taxes or Subsidies)
When the U. S. stopped controlling the fares and routes for air travel in 1978, airlines made decisions based on
market factors, increasing the supply of flights and the price of air travel fell.
What happens to supply of flights:
What happens to equilibrium price of flights:
What happens to equilibrium quantity of flights:
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5. If the government requires factories to reduce pollution, complying will initially increase costs of production in
the market and reduce supply.
What happens to supply of goods at the factory:
What happens to equilibrium price of the factory goods:
What happens to equilibrium quantity of the factory goods:
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