Suppose that business travelers and vacationers have the following demand for airline tickets from Karachi to Dubai: Price Quantity Demanded (Business Travelers) Quantity Demanded (vacationers) $150 2100 Tickets 1000 Tickets $200 2000 800 $250 $300 1900 1800 600 400 a. As the price of tickets rises from $150 to $200, what is the price elasticity of demand for (i) business travelers and (ii) vacationers? (Use the midpoint method in your calculations.) b. Why might vacationers have a different elasticity from business travelers? c. What would you recommend based on the above information for airline to increase the revenue?
Suppose that business travelers and vacationers have the following demand for airline tickets from Karachi to Dubai: Price Quantity Demanded (Business Travelers) Quantity Demanded (vacationers) $150 2100 Tickets 1000 Tickets $200 2000 800 $250 $300 1900 1800 600 400 a. As the price of tickets rises from $150 to $200, what is the price elasticity of demand for (i) business travelers and (ii) vacationers? (Use the midpoint method in your calculations.) b. Why might vacationers have a different elasticity from business travelers? c. What would you recommend based on the above information for airline to increase the revenue?
Chapter6: Elasticity
Section: Chapter Questions
Problem 11QP: Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price...
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Suppose that business travelers and vacationers have the following demand for airline tickets from Karachi to Dubai:
(Business Travelers) Quantity Demanded
(vacationers)
$150 2100 Tickets 1000 Tickets
$200 2000 800
$250
$300 1900
1800 600
400
a. As the price of tickets rises from $150 to $200, what is the price
b. Why might vacationers have a different elasticity from business travelers?
c. What would you recommend based on the above information for airline to increase the revenue?
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