Suppose that business travelers and vacationers have the following demand for airline tickets from New York to
Question:
Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:
Quantity Demanded Quantity Demanded Price (business travelers) (vacationers)
$150 2,100 tickets 1,000 tickets 200 2,000 800 250 1,900 600 300 1,800 400
a. As the price of tickets rises from $200 to $250, what is the price elasticity of demand for
(i) business travelers and (ii) vacationers?
(Use the midpoint method in your calculations.)
b. Why might vacationers have a different elasticity from business travelers?
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