Econ Company has hired you as their economist. Your first task is to estimate the price elasticity of demand for different flights (LAX to San Fran and LAX to Hong Kong). You find that LAX to San Fran flight has a price elasticity of demand of -3.1 while the LAX to Hong Kong flight has an elasticity of -0.9. Historically, the elasticities have been stable.

a. Qualitatively, explain the significance of your findings. Include in your analysis what you should generally do to the price based on the data.

b. What might explain the difference in elasticities between the two flights?

c. What flight should have the larger markup?

d. You have data that shows the marginal cost of the LAX to San Fran flight is 50 dollars. Are you able to find the optimal price for the flight given the marginal cost? if so, what is the optimal price? show work

e. You have data that shows the marginal cost of the LAX to hong kong flight is 250 dollars. are you able to find the optimal price for the flight given the marginal costs? if so what is the optimal price?