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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?
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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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