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Question
In order to encourage tourism in Goa, Government of India suggests Indian Airlines to reduce air fares to Goa from four major cities: Chennai, Kolkata, Mumbai and New Delhi. If the Indian Airlines reduces the air fare to Goa, how will this affect the market demand curve for air travel to Goa?
Solution
In the given situation, the expansion of demand will cause the market demand curve for air travel to Goa to move downward along the same demand curve.
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