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 a. As the price of tickets rises from $150 to $200, what is the price elasticity of demand for (i) business travelers and (ii) vacationers? (Use the midpoint method in your calculations.) b. Why might vacationers have a different elasticity from business travelers? c. What would you recommend based on the above information for airline to increase the revenue?
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 a. As the price of tickets rises from $150 to $200, what is the price elasticity of demand for (i) business travelers and (ii) vacationers? (Use the midpoint method in your calculations.) b. Why might vacationers have a different elasticity from business travelers? c. What would you recommend based on the above information for airline to increase the revenue?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
Section: Chapter Questions
Problem 2PA
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Suppose that business travelers and vacationers have the following
Price Quantity Demanded
(Business Travelers) Quantity Demanded
(vacationers)
$150 2100 Tickets 1000 Tickets
$200 2000 800
$250
$300 1900
1800 600
400
a. As the price of tickets rises from $150 to $200, what is the price elasticity of demand for (i) business travelers and (ii) vacationers? (Use the midpoint method in your calculations.)
b. Why might vacationers have a different elasticity from business travelers?
c. What would you recommend based on the above information for airline to increase the revenue?
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