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Question - Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:
Price
Quantity Demanded (business travellers)
Quantity Demanded (vacationers)
$150
2,100 tickets
1,000 tickets
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 from business travelers?
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