A study found that lower airfares led some people to substit

A study found that lower airfares led some people to substitute flying for driving to their vacation destinations. This reduced the demand for car travel and led to reduced traffic fatalities, since air travel is safer per passenger mile than car travel. Using the logic suggested by that study, suggest how each of the following events would affect the number of highway fatalities in any one year. a. An increase in the price of gasoline b. A large reduction in rental rates for passenger vans c. An increase in airfares

Solution

The study suggests that, the more is travel by car, the higher is number of highway fatalities. So a lower (higher) car travel will lower (raise) fatality.

(a) Higher gasoline price will make car travel costlier, so more people will travel by air, lowering use of highways. So, highway fatalities will decrease.

(b) Large reduction in van rental rate will make car travel cheaper than air travel, so car travel will increase. This will increase the number of highway fatalities.

(c) Increased airfare makes air travel costlier, so more people travel by cars. This will increase the number of highway fatalities.