The price elasticity of demand for business air travel is -0.75 and for nonbusiness air travel is -1.50. a. Give an interpretation of the price elasticity of demand for business air travel. b. In what category does the price elasticity of demand for nonbusiness air travel fall? c. Show graphically how airlines could use third-degree price discrimination in this case.
The price elasticity of demand for business air travel is -0.75 and for nonbusiness air travel is -1.50. a. Give an interpretation of the price elasticity of demand for business air travel. b. In what category does the price elasticity of demand for nonbusiness air travel fall? c. Show graphically how airlines could use third-degree price discrimination in this case.
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
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The
-1.50.
a. Give an interpretation of the price elasticity of demand for business air travel.
b. In what category does the price elasticity of demand for nonbusiness air travel fall?
c. Show graphically how airlines could use third-degree
case.
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