ECON 1050 Chapter 13: Economics-1 (1) (dragged) 7

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In figure 13. 9, part (a) show the market for business travel. The airline expands into the leisure market in part (b). Leisure travellers will not pay a a trip, so the demand for leisure travel is the curve dl. The airline sells 4,000 leisure trips at a trip. The airline increases its output to 12,000 trips a week. Consumer surplus increases and the airline"s producer surplus increases. Perfect price discrimination occurs if a firm is able to sell each unit of output for the highest price someone is willing to pay.

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