Question
Law of Demand Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston: Price Quantity Demanded by
Law of Demand
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 $250 to $300, the price elasticity of demand for business travelers is , and the price elasticity of demand for vacationers is , using the midpoint method. Therefore, the demand for airline tickets in this price range is elastic for vacationers because business travelers are sensitive to changes in price.
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Essentials Of Advanced Macroeconomic Theory
Authors: Ola Olsson ]
1st Edition
9780415685085
