Chapter20: Elasticity: Demand And Supply
Section: Chapter Questions
Problem 13E: Using the following equation for the demand for a good or service, calculate the price elasticity of...
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Question
Suppose that business travelers and vacationers have the following demand for airline tickets from Karachi to Dubai:
Price
Quantity Demanded
(Business Travelers)
Quantity Demanded
(vacationers)
$150
2100 Tickets
1000 Tickets
$200
2000
800
$250
$300
1900
1800
600
400
As the price of tickets rises from $150 to $200, what is the price
Why might vacationers have a different elasticity from business travelers?
What would you recommend based on the above information for airline to increase the revenue?
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