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2. Problems and Applications Q2 Suppose that business travelers and vacationers have the following demand for...

2. Problems and Applications Q2

Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:

Price

Quantity Demanded by Business Travelers

Quantity Demanded by Vacationers

(Dollars)

(Tickets)

(Tickets)
150 2,100 1,000
200 2,000 800
250 1,900 600
300 1,800 400

As the price of tickets rises from $200 to $250, the price elasticity of demand for business travelers is (4.35, 0.23, 0.78, 1)  , and the price elasticity of demand for vacationers is (4.35, 0.23,0.78,1.29)using the midpoint method. Therefore, the demand for airline tickets in this price range is (more, less) elastic for vacationers because business travelers are (less, more) sensitive to changes in price.

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