A. 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.)
B. If an airline company facing the above demand prefers higher revenue, will you recommend it to raise the price to$250? Suppose that the demand from vacationers has increased to be ten times larger than those shown in the above table. Will your recommendation change? Explain.
C. Why might vacationers have a different elasticity, if any, from business travelers?
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