2. Suppose that business travelers and vacationers have the following demand for bus tickets from Clark, Pampanga to Singapore: Quantity Demanded (business travelers) 4,100 4,000 3,900 3,800 Quantity Demanded (vacationers) 3,300 3,100 2,900 2,700 Price (in Pesos) 6,500 7,000 7,500 8,000 a) As the price of tickets rises from P7,500 to P8,000, what is the price elasticity of demand for (i) business travelers and (i) vacationers? b) What can you say about the demand elasticities of business travelers and vacationers? Are they the same or different? Why is that so? c) Is it possible for the airline to increase their ticket price further? How will it affect their revenue?

2. Suppose that business travelers and vacationers have the following demand for bus tickets from Clark, Pampanga to Singapore: Quantity Demanded (business travelers) 4,100 4,000 3,900 3,800 Quantity Demanded (vacationers) 3,300 3,100 2,900 2,700 Price (in Pesos) 6,500 7,000 7,500 8,000 a) As the price of tickets rises from P7,500 to P8,000, what is the price elasticity of demand for (i) business travelers and (i) vacationers? b) What can you say about the demand elasticities of business travelers and vacationers? Are they the same or different? Why is that so? c) Is it possible for the airline to increase their ticket price further? How will it affect their revenue?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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