Sometimes airlines raise ticket prices as the flight departure date approaches in the hope of increasing revenue on the assumption that consumer demand is:
A)steady in its price elasticity as departure time approaches.
B)less price-elastic as departure time approaches.
C)always unit elastic.
D)very sensitive to price changes as the time of departure approaches.

Question

Quizplus · Accepted Answer

As the departure time approaches, consumers become more committed to their travel plans and may be willing to pay a higher price to secure their desired flight. This means that demand becomes less price-sensitive, or less price-elastic. Therefore, airlines can raise ticket prices without fear of losing too many customers, leading to an increase in revenue.

Sometimes Airlines Raise Ticket Prices as the Flight Departure Date