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Question 1 Travel restrictions, notably cross-border regulation, social distancing requirements and quarantine rules, have significantly reduced the number of international commercial flights operate from and to Hong Kong during the global pandemic. As a student intern of a consultancy firm, you were assigned to prepare a demand-and-supply analysis of commercial flight service in Hong Kong. After investigation, the following TWO pieces of information extracts were collected for the analysis. Information extract 2 Greater Bay Airlines set to launch first scheduled service next month By Laura Westbrook, SCMP, 15 June 2022 Hong Kong-based carrier Greater Bay Airlines is set to launch its first scheduled commercial flight... in the same month as July 1 celebrations in Hong Kong marking the 255th anniversary of the city's return to Chinese rule.... While international travel is recovering around the world, with some European and North American carriers struggling to keep pace with pent-up demand, the airline planned to operate flights first to popular holiday destinations for Hongkongers, such as Bangkok, then Kuala Lumpur in Malaysia, Japan and Korea, before looking at the mainland.... it would stick to leasing three Boeing 737 this year, and only consider adding another plane or two if the situation improved. (Source: www.scmp.comews/hong-kong/hong-kong-economy/article/3181726/hong-kongs-greater-bay-airlineslaunch-first) (a) Consider the information extract 1 only, use 1 sentence to summarize the key information before introducing the factor affecting the market for commercial flight service in Hong Kong. Use demand-and-supply analysis to explain the effect on the equilibrium price and equilibrium quantity of commercial flight service in Hong Kong. No demand-and-supply diagram is required but you need to describe how the curve(s) shift(s) in your written explanation. (7 marks) (b) Consider the information extract 2 only, use 1 sentence to summarize the key information before introducing the factor affecting the market for commercial flight service in Hong Kong. Use a demand-and-supply analysis to explain the effect on the equilibrium price and equilibrium quantity of commercial flight service in Hong Kong. No demand-and-supply diagram is required but you need to describe how the curve(s) shift(s) in your written explanation. (7 marks) (c) Considering all effects identified in your answer of part (a) and (b), what are the combined effect on the equilibrium price and equilibrium quantity of commercial flight service in Hong Kong? Your analysis shows that there is an increase in ticket price of commercial flight service in Hong Kong. How could this observation be possible? Explain with a demand-and-supply diagram. (8 marks) Question 1 Travel restrictions, notably cross-border regulation, social distancing requirements and quarantine rules, have significantly reduced the number of international commercial flights operate from and to Hong Kong during the global pandemic. As a student intern of a consultancy firm, you were assigned to prepare a demand-and-supply analysis of commercial flight service in Hong Kong. After investigation, the following TWO pieces of information extracts were collected for the analysis. Information extract 2 Greater Bay Airlines set to launch first scheduled service next month By Laura Westbrook, SCMP, 15 June 2022 Hong Kong-based carrier Greater Bay Airlines is set to launch its first scheduled commercial flight... in the same month as July 1 celebrations in Hong Kong marking the 255th anniversary of the city's return to Chinese rule.... While international travel is recovering around the world, with some European and North American carriers struggling to keep pace with pent-up demand, the airline planned to operate flights first to popular holiday destinations for Hongkongers, such as Bangkok, then Kuala Lumpur in Malaysia, Japan and Korea, before looking at the mainland.... it would stick to leasing three Boeing 737 this year, and only consider adding another plane or two if the situation improved. (Source: www.scmp.comews/hong-kong/hong-kong-economy/article/3181726/hong-kongs-greater-bay-airlineslaunch-first) (a) Consider the information extract 1 only, use 1 sentence to summarize the key information before introducing the factor affecting the market for commercial flight service in Hong Kong. Use demand-and-supply analysis to explain the effect on the equilibrium price and equilibrium quantity of commercial flight service in Hong Kong. No demand-and-supply diagram is required but you need to describe how the curve(s) shift(s) in your written explanation. (7 marks) (b) Consider the information extract 2 only, use 1 sentence to summarize the key information before introducing the factor affecting the market for commercial flight service in Hong Kong. Use a demand-and-supply analysis to explain the effect on the equilibrium price and equilibrium quantity of commercial flight service in Hong Kong. No demand-and-supply diagram is required but you need to describe how the curve(s) shift(s) in your written explanation. (7 marks) (c) Considering all effects identified in your answer of part (a) and (b), what are the combined effect on the equilibrium price and equilibrium quantity of commercial flight service in Hong Kong? Your analysis shows that there is an increase in ticket price of commercial flight service in Hong Kong. How could this observation be possible? Explain with a demand-and-supply diagram. (8 marks)

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