Suppose that business travelers and vacationers have the following demand for airline tickets from New York to
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Question:
Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:
| Price | Quantity Demanded by Business Travelers | Quantity Demanded by Vacationers |
|---|---|---|
| (Dollars) | (Tickets) | (Tickets) |
| 150 | 2,100 | 1,000 |
| 200 | 2,000 | 800 |
| 250 | 1,900 | 600 |
| 300 | 1,800 | 400 |
As the price of tickets rises from $200 to $250, the price elasticity of demand for business travelers is (4.35, 0.23, 0.78, 1) , and the price elasticity of demand for vacationers is (4.35, 0.23,0.78,1.29)using the midpoint method. Therefore, the demand for airline tickets in this price range is (more, less) elastic for vacationers because business travelers are (less, more) sensitive to changes in price.
Expert Answer:
To calculate the price elasticity of demand for both business travelers and vacationers using the mi... View the full answer
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