Economics 1021A/B Lecture Notes - Lecture 6: Demand Curve, Normal Good
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7 Oct 2015
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1. What is price elasticity of demand when prices increase from $3 to $4 and quantity decrease from 90 cups to 70 cups?
2.Ā Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:
Price | Quantity Demanded by Business | Quantity Demanded by Vacationers |
150 | 2100 | 1000 |
200 | 2000 | 800 |
250 | 1900 | 600 |
300 | 1800 | 400 |
As the price of tickets rises from $200 To $250, what is the price elasticity of demand for a) business travelers and b) vacationers? Use the midpoint method to calculate. Why might vacationers have a diffeent elasticity from business travelers?
3. How can sellers utilize the price elasticity of demand for maximum total revenue?