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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Transatlantic air travel in business class has an estimated elasticity of demand of Chapter 5, Problem 25CTQ, Transatlantic air travel in business class has an estimated elasticity of demand of while , example  1 while transatlantic air travel in economy class has an estimated price elasticity of Chapter 5, Problem 25CTQ, Transatlantic air travel in business class has an estimated elasticity of demand of while , example  2 Why do you think this is the case?

To determine

The elasticity of demand for business class in transatlantic air travel is 0.62 whereas air travel in economy class has an elasticity of demand of 0.12. Comment why is this possible?

Explanation

The elasticity of demand for business class is more than the elasticity of demand for economy class. It means that the demand for air travel in economy class is relatively inelastic as compared to air travel in business class. This could be because for most of the business class the air fare is paid by the employers and not the employees so it does not...

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