Delta Airlines price discriminates by charging higher prices to business travelers than to vacation travelers. This pricing strategy reflects the fact that business travelers' _____ air travel is _____ than that of vacation travelers.
A)demand for; more sensitive to price
B)demand for; less sensitive to price
C)supply of; more sensitive to price
D)supply of; less sensitive to price

Question

Quizplus · Accepted Answer

Business travelers have less price sensitivity because their travel is usually funded or subsidized by their companies and they often have less flexibility in their travel dates and times. Vacation travelers, on the other hand, have more price sensitivity as they have more flexibility in their travel plans and may be seeking to save money on their overall vacation expenses. Therefore, Delta Airlines charges higher prices to business travelers as they have a lower price sensitivity, and lower prices to vacation travelers to attract more price-sensitive customers.

Delta Airlines Price Discriminates by Charging Higher Prices to Business