Question: An airline determines that when a round-trip ticket between Los Angeles and San Francisco costs p dollars (0 p 160), the daily demand

An airline determines that when a round-trip ticket between Los Angeles and San Francisco costs p dollars (0 ≤ p ≤ 160), the daily demand for tickets is q = 256 − 0.01p².

a. Find the elasticity of demand. Determine the values of p for which the demand is elastic, inelastic, and of unit elasticity.

b. Interpret the results of part (a) in terms of the behavior of the total revenue as a function of unit price p.

c. What price would you advise the airline to charge for each ticket? Explain your reasoning.

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a Note E160 is not defined since q 0 when p 160 Ep is defined for 0 p as the values where demand i... View full answer

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