Answer to Question #146846 in Economics for Dora

Question

Using the midpoint method, calculate the price elasticity for business travellers and holiday travellers if the price increases from R1 700 to R3 000. Which one of the following might be the reason for the difference between the price elasticity for business travellers and the price elasticity for holiday travellers?

Answer 1

To calculate the price elasticity for business travellers and holiday travellers if the price increases from R1 700 to R3 000 we need to know the number of travellers at each price.

The price elasticity for business travellers and the price elasticity for holiday travellers differ, because business travellers should have more inelastic demand.