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Sagot :
Answer:
Quantity Demanded Quantity Demanded
(business travelers) (vacation travelers)
a. Price Elasticity of Demand 0.23 ) 1.3
= Inelastic Elastic
b. The vacation travelers might have a different elasticity from business travelers because vacation travels are leisure activities. The travelers can change their mind not to embark on the travel when they can no longer afford the cost. This is unlike business travelers, who travel for business purposes and not for leisure. Their costs are always recaptured in their revenues.
Explanation:
a) Data and Calculations:
Price Quantity Demanded Quantity Demanded
(business travelers) (vacation travelers)
$150 2,100 tickets 1,000 tickets
$200 2,000 800
$250 1,900 600
$300 1,800 400
Change in demand = 100 (2,000 - 1,900) 200 (800 - 600)
= 100/1,950 * 100 200/700 * 100
= 5.13% 28.6%
Change in price = $50 ($200 - $250) = 22%
Price Elasticity of Demand = Change in Quantity Demanded/Change in Price
= 0.23 (5.13%/22%) 1.3 (28.6%/22%)
= Inelastic Elastic
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