Rising jet fuel prices recently led most major US airlines to raise fares by approximately 15%. Explain how this substantial increase in airfares would affect the following: The demand for air travel. The demand for hotels. The demand for rental cars. The supply of overnight mail.

Suppose that the percentage change in supply is 15%, the price elasticity of supply is 3, and the percentage change in the equilibrium price is 3%. What is the price elasticity of demand? A) 3 B) 0 C) 1     D) 2   Suppose that the percentage change in supply is 25%, the price elasticity of demand is 1, and the percentage change in the equilibrium price is 5%. What is the price elasticity of supply? A) 2 B) 5 C) 4     D) 0   Suppose that the percentage change in demand is 16%, the price elasticity of demand is 1, and the percentage change in the equilibrium price is 4%. What is the price elasticity of supply? A) 2 B) 1 C) 3     D) 0

If the percent rise in price is larger than the percent decline in quantity, then: the demand for your product could be either elastic or inelastic. the demand for your product is elastic. the demand for your product is inelastic. the demand for your product could be neither elastic nor inelastic.

The following graph plots a supply curve for some hypothetical good. PRICE (Dollars per unit) 270 135 W True False QUANTITY (Units) Elastic II II II II II II 88 99 For each of the regions, use the midpoint method to identify whether the supply of this good is elastic or inelastic. Region Inelastic Between V and W Between X and Y Supply ? True or False: As firms reach near maximum capacity at high levels of quantity supplied, supply becomes more elastic because firms may need to invest in additional capital in order to further increase production.