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

question 64

Multiple Choice

The short-run price elasticity of demand for airline travel is 0.05,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 travellers.
• B)collect more revenue from travellers who book well in advance.
• C)lose money on short-notice travellers.
• D)collect less revenue from travellers who book well in advance.
• E)lose many of its short-notice travellers.

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Definitions:

Double Marginalization

A situation in a supply chain where both the manufacturer and retailer mark up prices above their marginal costs, leading to inefficiencies.

Retail Price

The total cost at which a product or service is sold to the end consumer.

Manufacturer Markup

The difference between the cost of manufacturing a product and its selling price, set by manufacturers to cover expenses and profit.

Diagnostic Software

Computer programs designed to identify and help solve problems within a hardware or software system.