increase in jet fuel price affects supply.

Step 3. An increase in the price of jet fuel caused an increase in the cost of air travel. We show this as an

upward or leftward shift in supply.

Step 4. A leftward shift in supply causes a movement up the demand curve, increasing the equilibrium

price of air travel and decreasing the equilibrium quantity.

6. Step 1. Draw the graph with the initial supply and demand curves. Label the initial equilibrium price and

quantity.

Step 2. Did the economic event affect supply or demand? A tariff is treated like a cost of production, so this

affects supply.

Step 3. A tariff reduction is equivalent to a decrease in the cost of production, which we can show as a

rightward (or downward) shift in supply.

Step 4. A rightward shift in supply causes a movement down the demand curve, lowering the equilibrium

price and raising the equilibrium quantity.
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