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In: Economics

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

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

                                    Quantity Demanded                             Quantity Demanded

Price                             (business travelers)                              (vacationers)

150                                           2,100 tickets                             1,000 tickets

200                                           2,000                                        800

250                                           1,900                                        600

300                                           1,800                                        400

  1. As the price of tickets rises from 200 to 250, what is the price elasticity of demand for (i) business travelers and (ii) vacationers? (Use the midpoint method in your calculations.) Explain the difference.

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