usiness Economics: Assignment 1 Table 1 and Table 2 show the price and income elasticities of demand respectively for selected air travel markets. Table Estimated Price Elasticities of Passenger Demand Route/Market level Intra N America Intra Europe Intra Asia Intra Sub-Saharan Africa Intra S Amenca Trans-Atlantic Trans-Pacific Europe-Asia Source: IATA National level Supra-national level Short-haul -12 -1.1 -1.1 Long-haul -1.1 -1.0 -1.0 Short-haul Long-haul Table 2 Estimated Income Elasticities of Passenger Demand Route I Market level US Developed economies Developing economies National level US Developed economies Developing economies Source: IATA Short-haul 18 15 2.0 Short-haul 16 Med um-haul 2.0 Med um-haul 17 14 Long-haul 2.0 22 Long-haul 15 2.0 Very long-haul 22 24 27 Very long-haul 2.0 22 25 a) b) Define the concepts of price elasticity of demand, income elasticity of demand, and cross elasticity of demand Use diagrams to illustrate your arguments. (15 Marks) Using the information presented in the above tables, explain how the concepts of price and income elasticity of demand can assist airline managers to Increase revenues of their business and maximize profits. (25 Marks)