Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston: Price Quantity Demanded by Business Travelers Quantity Demanded by Vacationers (Dollars) (Tickets) (Tickets) 150 2,100 1,000 200 2,000 800 250 1,900 600 300 1,800 400 As the price of tickets rises from $250 to $300, the price elasticity of demand for business travelers is and the price elasticity of demand for vacationers is , using the midpoint method. Therefore, the demand for airline tickets in this price range is elastic for vacationers because business travelers are sensitive to changes in price.

Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston: Price Quantity Demanded by Business Travelers Quantity Demanded by Vacationers (Dollars) (Tickets) (Tickets) 150 2,100 1,000 200 2,000 800 250 1,900 600 300 1,800 400 As the price of tickets rises from $250 to $300, the price elasticity of demand for business travelers is and the price elasticity of demand for vacationers is , using the midpoint method. Therefore, the demand for airline tickets in this price range is elastic for vacationers because business travelers are sensitive to changes in price.

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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