Suppose that business travelers and vacationers
Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:
QUANTITY DEMANDED QUANTITY DEMANDED PRICE (BUSINESS TRAVELERS) (VACATIONERS)
$150 2,100 1,000
200 2,000 800
250 1,900 600
300 1,800 400
a. As the price of tickets rises from $200 to $250, 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 than business travelers?
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