1: Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston: Price Travelers Qds Vacationers Qds $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 Arc-Elasticity in your calculations.) b) Why might vacationers have a different elasticity from business travelers?

Q: 1.

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