EIRP Proceedings, Vol 6 (2011)

Abstract

The decrease of the charge/unit price determines the extension of demand, as well as the increase
of the amount of a product/service required on the market. The relationship between the evolution of
charge/unit price (the independent variable) and the market demand of a good/service (the dependent
variable) can be illustrated in a table, a function or a graph. The causal relationships between the change of
the charge/unit price of a good/service and the change of the amount required represent the essence of the
general law of demand. This law is not fully valid when it comes to services. There are situations which
apparently contradict the general law of demand: there are buyers who mostly use the services of a company
even if this asks for higher prices on the grounds of saving time, which reflects the relationship between the
price and the quality of the service offered. Price increase can be accompanied by the increase of the quantity
required when the difference in price can be compensated for by the growth in quality. The increase or
decrease of demand can be determined, at a certain offer, by the change of the charge/unit price of a
good/service. The following paper deals with the limits of the demand shift under the conditions of a price
change. The direct competition between the airlines offering full services (classical companies) and those that
do not offer any auxiliary services (low cost) is increasing in the entire world.