If the demand for air travel were to change so that business travelers and vacationers have the same price elasticity of demand for air travel,
A) airlines would charge the same price to each type of flyer.
B) airlines would still charge business flyers a higher fare since the traveler's employer pays anyway.
C) airlines would be driven out of business.
D) airlines would counter by charging vacationers a higher fare.

Question

Quizplus · Accepted Answer

If both types of travelers have the same price elasticity of demand, airlines would charge the same price to each type of flyer. This is because they would respond equally to changes in price, and it would not be justified to charge one group a higher fare.

If the Demand for Air Travel Were to Change So