4. Suppose that business travellers and holidaymakers have the following demand for airline tickets from Birmingham to

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4. Suppose that business travellers and holidaymakers have the following demand for airline tickets from Birmingham to Naples:

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a. As the price of tickets rises from €200 to €250, what is the price elasticity of demand for (i) business travellers and (ii) holidaymakers? (Use the midpoint method in your calculations.)

b. Why might holidaymakers have a different elasticity from business travellers?

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Business Economics

ISBN: 388402

2nd Edition

Authors: Mark P. Taylor, Andrew Ashwin, N. Gregory Mankiw

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