4 . Problems and Applications Q2

Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston: Price Quantity Demanded by Business Travelers Quantity Demanded by Vacationers (Dollars) (Tickets) (Tickets) 150 2,100 1,000 200 2,000 800 250 1,900 600 300 1,800 400 As the price of tickets rises from $150 to $200, the price elasticity of demand for business travelers is V , and the price elasticity of demand for vacationers is V , using the midpoint method. Therefore, the demand for airline tickets in this price range is V elastic for vacationers because business travelers are 7 sensitive to changes in price