Final answer:
The demand for autos is more elastic than the demand for Honda Accords due to the availability of substitutes. An inelastic demand curve means that consumers are less responsive to price changes. Factors such as traveler types and the necessity of service influence the elasticity of demand for air travel classes.
Step-by-step explanation:
The demand for autos is likely to be more elastic than the demand for Honda Accords. The reason behind this is that the category of 'autos' includes a wide range of vehicles from various brands, models, and types. If the price of one brand or type of auto goes up, consumers can easily switch to another, showing a higher sensitivity to price changes. This is reflected in a higher elasticity of demand. In contrast, the demand for a specific brand and model, such as Honda Accords, is less elastic because the options for substitutes within that specific category are limited.
When the demand curve is inelastic, the percentage change in demand from price A to price B is smaller than the percentage change in price, indicating that consumers are less responsive to price changes in that area of the curve. For example, if the demand curve is inelastic from Point D to Point E, this means the elasticity value is less than one, and changes in price would not lead to proportionally significant changes in the quantity demanded.
In terms of supply, if supply is elastic, shifts in demand will generally have a larger effect on equilibrium quantity rather than price. As for the elasticity of demand for air travel, business class has a lower elasticity (0.40) compared to economy class (elasticity of 0.62), possibly due to the differences in the types of travelers and the necessity of the service for various travelers, with business travelers being less price-sensitive.