Question #293429
Suppose that business travelers and vacationers have the following demand for airline tickets from City X to City Y:
As the price of tickets rises from $200 to $250, what is the price elasticity of demand for (i) business travelers and (ii) vacationers? (Use the arc elasticity method in your calculations.)
Expert's answer
If the price of tickets rises from $200 to $250, then to calculate the price elasticity of demand for (i) business travelers and (ii) vacationers we need to know the quantities demanded at each price.
