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3. Suppose that business travellers and vacationers have the following demand for airline tickets from Dhaka to Chittagong: Price (in taka) Quantity demanded (business travellers)

3. Suppose that business travellers and vacationers have the following demand for airline tickets from Dhaka to Chittagong:

Price (in taka) Quantity demanded (business travellers) Quantity demanded (vacationers)

150 2100 1000

200 2000 800

250 1900 600

300 1800 400

As the price of tickets rises from Tk250 to Tk300, what is the price elasticity of demand for (i) business travellers and (ii) vacationers? (Use the midpoint method in your calculations.) b. Why might vacationers have a different elasticity from business travellers?

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