Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:


a. As the price of tickets rises from $200 to $250, 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 businesstravelers?
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December 14, 2012

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