Suppose that business travellers and vacationers have the following demand for airline tickets from Dhaka to Chittagong: Price (in taka) Quantity demanded (business travellers) Quantity demanded (vacationers) 150 2100 1000 200 2000 800 250 1900 600 300 1800 400 As the price of tickets rises from Tk250 to Tk300, what is the price elasticity of demand for (i) business travellers and (ii) vacationers? (Use the midpoint method in your calculations.) b. Why might vacationers have a different elasticity from business travellers?

Q: 1.

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