Final answer:
The demand for bus tickets is likely to be the most price inelastic among the given options because transportation is a necessity with few alternatives. If supply is elastic, shifts in demand have a larger effect on equilibrium quantity than on price. Business class air travel has less elastic demand compared to economy, possibly because the costs are often covered by businesses.
Step-by-step explanation:
The demand for which of the following is likely to be the most price inelastic? When considering the options, transportation in general is a necessity, and it is often less sensitive to price changes than non-essential services. For example, if the price of bus tickets rises, people still need to use buses to commute to work or school, and there may be few alternatives available. This makes the demand for bus tickets relatively inelastic. On the other hand, taxi rides and airline tickets can have more elastic demand because there are usually more substitutes available and these services are often used for less essential travel.
In the marketplace, if supply is elastic, shifts in demand will generally have a more significant impact on the equilibrium quantity than on the price. This is because suppliers are able to adjust their production easily in response to changes in demand.
As for the estimated elasticity of demand of 0.62 for transatlantic air travel in business class versus 0.12 in economy class, this may reflect the fact that business class travelers are often traveling for work purposes and may not be as price sensitive since the costs are typically borne by their companies. Hence, demand is less elastic. In contrast, economy class travelers are often more price sensitive, especially those traveling for personal reasons, which leads to a more elastic demand.