Solution-Explain the significance of findings

Explain the significance of findings

Reference no: EM133123951

Southwest has hired you as their economist. Your first task is to estimate the price elasticity of demand for different flights (Seattle to Denver and Seattle to Chicago). You find that the Seattle to Denver flight has a price elasticity of demand of 3.1 while the Seattle to Chicago flight has an elasticity of -1.7. Historically, the elasticities have been stable.

a) Qualitatively, explain the significance of your findings.

B) What might explain the difference in elasticities between the two flights?

C) What flight should have the larger markup?

D) You have data that shows the marginal cost of the Seattle to Denver flight is 85 dollars. Are you able to find the optimal price for the flight given the marginal costs? If so, what is the optimal price?

E) You have data that shows the marginal cost of the Seattle to Chicago flight is 400 dollars. Are you able to find a better price for the flight for the flight given the marginal costs?

Reference no: EM133123951

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Explain the significance of findings

Reference no: EM133123951

Reference no: EM133123951

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