. INDIVIDUAL AND MARKET DEMAND 2
SECTION 1. INDIVIDUAL AND MARKET DEMAND 2
A. Individual Demand 2
B. Market Demand and Market Demand Determinants. 4
EXAMPLE: INTERNATIONAL MARKET DEMAND FOR AUTOMOBILES 5
B. Market Demand and Market Demand Determinants. 6
. Incremental Revenue 7
. Marginal Revenue 7
. Price Elasticity of Demand 8
D. Total Revenue Rule. 9
EXAMPLE: Science City. 10
Table 2 Survey Data for General Admission Tickets from 607 Adults 10
Table A-1 Survey Data for General Admission Tickets from 607 Adults 10
Figure A-1 11
Figure 4. Elasticity and Total Revenue 12
E. Market Size and Market Boundaries 14
Section 2. Supply and Supply Determinants 1
SECTION 3. SUPPLY, DEMAND, AND EQUILIBRIUM 4
CHAPTER 5 DEMAND AND SUPPLY
Major pricing strategies and major public policies on the regulation of industry often hinge on the estimation of what will happen to demand. Nowhere is this more apparent than in the airline industry. In 1977 an economist, Alfred Kahn, was appointed head of the Civil Aeronautics Board (CAB), an agency which had been established in 1938 to supervise the infant airline industry. What he found was an agency in which the staff was actively prosecuting cases against airlines for the illegal act of reducing prices for consumers! Amazed at what he found, Kahn became a key figure in the struggle which led to deregulation of the industry and the demise of the government agency Kahn had been appointed to supervise.
Frank Borman, who had been an astronaut on the first Apollo flight to circumnavigate the moon and who was the Chief Executive Officer of Eastern Airlines when deregulation was being debated, provides the following description of industry's reaction to deregulation:
The airline industry was dragged kicking and screaming into deregulation- and that included me.
I wish it hadn't, because I have come to believe that deregulation was the best thing that ever happened...