Answer to Question #250931 in Macroeconomics for James

Question

1. As the price of tickets rises from 200 to 250, what is the price elasticity of demand for business travelers and vacationers?

Answer 1

Data

price elasticity of demand for business travelers

=((2000-1900)/((2000+1900)/2))/((250-200)/((200+250)/2))

=0.23

price elasticity of demand for vacationers

=((800-600)/((800+600)/2))/((250-200)/((200+250)/2))

=1.29