CRITICAL THINKING QUESTIONS

Critical-Thinking Questions 1) Transatlantic air travel in business class has an estimated elasticity of demand of 0.40 less than transatlantic air travel in economy class, which has an estimated price elasticity of 0.62. Why do you think this is the case? 2) Use the information in the table below to identify the type of cross elasticity relationship between products X and Y and whether demand is cross elastic or cross inelastic in each of the following five cases, A to E. Cases Percent Percent Substitutes or Cross Elastic or change in change in complements Inelastic price of Y demand of X A 5 7 B -9 -6 C D 0 E 103) Use the information in the table below to identify the income elasticity type of each of the folowwing products, A to E. Product Percent change income in Percent change demand in Normal 01' Inferior Elastic, Inelastic or Unit Elastic