If airline companies were able to distinguish between groups of people with different price elasticities, it...
If airline companies were able to distinguish between groups of people with different price elasticities, it would charge the highest price to:
senior citizens, because senior citizens have positive price elasticities of demand.
government workers, because government workers have higher price elasticities of demand.
people with relatively low incomes, because lower income people have higher price elasticities of demand.
business people, because business people have lower price elasticities of deman
Homework Answers
business people, because business people have lower price elasticities of demand.
Airline companies would charge higher price from business people because they are inelastic with the price of ticket as they have to travel for business. Person who travels for vacations have elastic demand so higher price decreases demand of airline tickets but increase in price for business people does not reduce its demand. So, charging higher price from business people gives more revenue to firm.
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If airline companies were able to distinguish between groups of
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