Answer to Question #293429 in Economics for Jotes@3

Question

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.)

Answer 1

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.