Principles of Economics

Principles of Economics

Principles of Economics

In this context, the article on the review is “Low-cost airfares: How ticket prices fall and rise” (Gornall, 2013) published on June 2013 in the BBC website. Several things are highlighted in the article including how airlines strive to fill seats rather than maximize on profit gain, flexibility of the prices, and the existing gaps between costs is almost closed. Two customers are seated on a plane, and one of them raised the idea of fares being different. The other one having paid later feels bad about it as it is was expensive for her. It brings the issue of price falls and rises in the major airlines.

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I agree with the author’s comments on the issue. According to the principles of economics, demand and supply operate hand in hand. The supply in the market must meet the demand existing (Taussig, 2013). Air travel fares fall when the demand is low and rise when the demand is high. The reason for the fall and rise is to ensure the available resources remain constant while the demand is met by the supply. The number of planes is constant or increases insignificantly, but the number of passengers keeps rising. Flexing the fares is the only way to handle the problem.

References
Frank, R. H., Bernanke, B., & Johnston, L. D. (2007). Principles of economics. New York: McGraw-Hill/Irwin.

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