Question
After graduation, you decide to start up a lakeside boat, kayak, and paddleboard rental business. You hire an econometrician (an economist who specializes in statistical
After graduation, you decide to start up a lakeside boat, kayak, and paddleboard rental business. You hire an econometrician (an economist who specializes in statistical analysis) to estimate the elasticities of demand of your clients. You learn that at the current rental price of $30/hour, customers aged 8-19 have an elasticity of demand equal to -1.7, those aged 19+ have an elasticity of demand equal to -0.6. Draw an approximate demand curve for each customer group (doesn't have to be perfect but should take into consideration their relative elasticities). Use your diagrams to help explain how you can take advantage of (and benefit from) this information about the two groups' elasticities. (Hint: think revenues)
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