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The government of Byngia has introduced a new tax on airline travel. Byngia has two types of travelers, business travelers and leisure travelers.Business travelers in
The government of Byngia has introduced a new tax on airline travel. Byngia has two types of travelers, business travelers and leisure travelers.Business travelers in Byngia have an elasticity of -.8, while Byngian leisure travelers have an elasticity of -3.2.Airlines can price discriminate among these groups.Which type of traveler will bear the larger burden of the tax?(1 point for answer, 1 point for explanation)
You can assume that the airlines do not have a perfectly inelastic supply.
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