The Short-Run Price Elasticity of Demand for Airline Travel Is

question 32

Multiple Choice

The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36. This means that a significant increase in airline ticket prices will cause airline companies to:

• A) collect less revenue from short-notice travelers.
• B) collect more revenue from travelers who book well in advance.
• C) lose money on short-notice travelers.
• D) collect less revenue from travelers who book well in advance.
• E) lose many of its short-notice travelers.

---

Definitions:

Retained Earnings

The portion of net income left over for the business after it has paid out dividends to its shareholders, often reinvested in the business.

Ending Balance

The amount in an account at the end of an accounting period after all debits and credits have been accounted for.

Cash Account

An account that records cash transactions involving the inflows and outflows of cash.

Ending Balance

The final amount in an account at the end of a period, reflecting all transactions.