Airlines that engage in price discrimination charge higher prices to business travellers because their _____ is more _____ than that of other travellers.
A) demand;elastic
B) demand;inelastic
C) supply;elastic
D) supply;inelastic

Question

Quizplus · Accepted Answer

Price discrimination occurs when a company charges different prices for the same product or service to different consumers based on their willingness to pay. Business travelers tend to have a more inelastic demand for air travel since they are usually traveling for work and need to arrive at a specific time, whereas other travelers, such as leisure travelers, may have a more elastic demand and be willing to delay or adjust their travel plans to find a cheaper price. Therefore, airlines can charge higher prices to business travelers as they are less sensitive to price changes.

Airlines That Engage in Price Discrimination Charge Higher Prices to Business