In order to encourage tourism to Kanyakumari. Indian airlines reduces the air fare to Kanyakumari. How would this affect the market demand curve for air travel?
Sahaj, reducing airfare will make tourism to Kanyakumari cheaper, hence, attractive. This will encourage more number of tourists to visit Kanyakumari. Consequently, the demand curve for air tickets will shift parallely rightwards. This increase in demand will lead to excess demand, since capacity or number of aeroplanes has not been increased simultaneously.
You can refer to the concept of increase in demand (when supply remains constant) in relation to this question by following the below link,
https://www.meritnation.com/cbse/class12-commerce/studymaterial/economics/introductory-microeconomics/market-equilibrium/338_1984_5822#slide2_market-equilibrium-under-fixed-number-of-firms
You can refer to the concept of increase in demand (when supply remains constant) in relation to this question by following the below link,
https://www.meritnation.com/cbse/class12-commerce/studymaterial/economics/introductory-microeconomics/market-equilibrium/338_1984_5822#slide2_market-equilibrium-under-fixed-number-of-firms