A regional manager for Delta Airlines is making pricing decisions and requests information on the price...
A regional manager for Delta Airlines is making pricing decisions and requests information on the price elasticities of demand for air travel. The company’s research analyst explains that this calculation depends upon the type of passenger, with business passengers having a different price elasticity of demand for air travel than leisure passengers. Which of the following best explains why these two types of people have different price elasticities of demand and which type of passenger likely has more elastic demand?
A. Business travelers have more inelastic demand because they travel out of necessity.
B. Leisure travelers have more inelastic demand because they have several substitutes for air travel.
C. Business travelers have more inelastic demand because they have several substitutes for air travel.
D. Leisure travelers have more inelastic demand because they travel for fun and aren't on a restricted schedule.
Homework Answers
It can actually be mentioned that business travelers have less elasticity or relatively inelastic and this is because business travelers actually travel out of necessity and at any cost they will travel but leisure travelers see the price and commence their schedule accordingly and therefore they have more elasticity than normal.
Therefore (A) is the answer to this question
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