Microeconomics Exercises

Microeconomics Exercises

Answer 2 (a)

Price elasticity is regarded to be percentage change in quantity demand with respect to change in prices. Price elasticity of demand is vital in order to predict market sensitivity with respect to changes in prices. Airline industry as discusses in the chapter distributed in two segment; business travelers and pleasure travelers. Business travelers' price elasticity of demand impact is analyzed in this case. Business travelers presumed to be not that price sensitive and it demand does not reduces if prices increase. In this scenario, it is discussed that Airlines looking towards increasing revenue possibility through cut walk-up ...