Question

Sometimes airlines raise ticket prices as the flight departure date approaches in the hope of increasing revenue. The airlines raise their prices on the assumption that:

a-consumer demand becomes less price-elastic as departure time approaches
b-consumers are not aware of airline prices.
c-consumer demand becomes more price-elastic as departure time approaches
d-consumer demand is unrelated to prices

Answer 1

The correct answer is a - consumer demand becomes less price-elastic as departure time approaches.

Step-by-step explanation:

The correct answer is a - consumer demand becomes less price-elastic as departure time approaches.

As the flight departure date approaches, consumers often have limited flexibility in changing their plans. This makes their demand for airline tickets less responsive to changes in price. Airlines take advantage of this by raising ticket prices to maximize revenue.

For example, if a consumer needs to travel on a specific date and there are limited alternatives, they are more likely to be willing to pay a higher price.