Question

Compare and contrast the demand factors which impact pricing of gas and airline tickets.

Answer 1

Demand factors affecting the price of gas -

1. Economic conditions of taxes, political stability plays a dominant role especially on the manufacturers and the incidence of which falls on the customer

2. Climatic conditions- that are during low temperature the demand is more for heating whereas during warmer temperature there is an increase in demand for cooling hence electricity generation

3.Price of a substitute- the price of petroleum falling may lead to an increased demand for petroleum and decreased demand for gas and vise versa. Hence also suggesting that price increase or decrease can have an effect on the demand for gas.

Demand factors affecting airline tickets

1.Season - The demand for airline tickets are highest during the holiday season as people in a large group are off traveling

2. Price of substitute-One does tend to compare the prices across the varied airlines and the one which is within the budget is preferred hence high prices of airline tickets will lead to a fall in demand

3. Income, exchange rate and population density too has a dominant role in the demand for airline tickets

Some of the common factors that affect both will be economic conditions, income, and also the price of substitutes.