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alculate the price elasticity of demand for both economy and premium seats using the mid-point method and classify the two seats based on the price elasticity of demand.

alculate the price elasticity of demand for both economy and premium seats using the mid-point method and classify the two seats based on the price elasticity of demand.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Calculate the price elasticity of demand for both economy and premium seats using the mid-point method and classify the two seats based on the price elasticity of demand. 

Question 1 In an economy, long distance travel is usually provided by high-speed rail and coaches. The fares of high-speed rail are in general higher than the coach fares. Consider a high-speed rail company that offers two classes of seats in its rides, a small number of premium seats at a higher price and a large number of economy seats at a relatively lower price. The company has increased the ticket prices recently for both seats to cover the higher operational costs. The prices and quantities sold for both seats before and after the price hike is shown in the table below. Economy Seats Premium Seats Price Quantity Price Quantity $30 280 $200 50 $45 140 $300 40 (a) Calculate the price elasticity of demand for both seats using the mid-point method and classify the two seats based on the price elasticity of demand.
Transcribed Image Text:Question 1 In an economy, long distance travel is usually provided by high-speed rail and coaches. The fares of high-speed rail are in general higher than the coach fares. Consider a high-speed rail company that offers two classes of seats in its rides, a small number of premium seats at a higher price and a large number of economy seats at a relatively lower price. The company has increased the ticket prices recently for both seats to cover the higher operational costs. The prices and quantities sold for both seats before and after the price hike is shown in the table below. Economy Seats Premium Seats Price Quantity Price Quantity $30 280 $200 50 $45 140 $300 40 (a) Calculate the price elasticity of demand for both seats using the mid-point method and classify the two seats based on the price elasticity of demand.
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