Question

As the price of tickets rises from $200 to $250, the price elasticity of demand for business travelers is , and the price elasticity of demand for vacationers is , using the midpoint method. Therefore, the demand for airline tickets in this price range is elastic for vacationers because business travelers are sensitive to changes in price.

Answer 1

The price elasticity of demand measures how responsive the quantity demanded is to a change in price. It can be calculated using the midpoint method, which is (change in quantity demanded / average quantity demanded) / (change in price / average price).

Using the midpoint method to calculate the price elasticity of demand for business travelers and vacationers, you would need more information such as the change in quantity demanded and the average quantity demanded for each group at different prices.

It is not possible to say if the demand is elastic or not for either group based on the information provided.