2. (a) Suppose that business travelers and vacationers have the following demand for airline tickets. Price Quantity Demanded (business travelers) Quantity Demanded (vacationers) 1000 tickets $150 2100 tickets 200 2000 800 250 1900 600 300 1800 400 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 & interpret the results) • Why might vacationers have a different elasticity from business travelers? (b) "A good harvest will generally lower the income of farmers". Illustrate this proposition using a supply and demand diagram.

2. (a) Suppose that business travelers and vacationers have the following demand for airline tickets. Price Quantity Demanded (business travelers) Quantity Demanded (vacationers) 1000 tickets $150 2100 tickets 200 2000 800 250 1900 600 300 1800 400 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 & interpret the results) • Why might vacationers have a different elasticity from business travelers? (b) "A good harvest will generally lower the income of farmers". Illustrate this proposition using a supply and demand diagram.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. (a) Suppose that business travelers and vacationers have the following demand for airline
tickets.
Quantity Demanded
Quantity Demanded
(vacationers)
1000 tickets
Price
(business travelers)
2100 tickets
$150
200
2000
800
250
1900
600
300
1800
400
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 & interpret the results)
Why might vacationers have a different elasticity from business travelers?
(b) "A good harvest will generally lower the income of farmers". Illustrate this
proposition using a supply and demand diagram.

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