Suppose the Price Elasticity of Demand for Business Air Travel

question 144

Multiple Choice

Suppose the price elasticity of demand for business air travel is −0.80 and the price elasticity of demand for leisure air travel is −1.60. Therefore, the demand for leisure air travel is:

• A) less elastic than the demand for business travel.
• B) inelastic.
• C) more elastic than the demand for business travel.
• D) unrelated to consumers' incomes.

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Definitions:

GDP

Gross Domestic Product, the total market value of all finished goods and services produced within a country in a given period.

Economic Recovery

A period in which economic activity rebounds following a recession or economic downturn, characterized by increases in employment, consumer spending, and growth.

Money Supply

The total amount of money available in an economy at a specific time, including cash and deposits.

Tax Increase

An escalation in the statutory rate imposed by the government on income, goods, services, or transactions.