Chapter 11 - Assignment 4: Elasticity of Demand: "Hints on Obtaining Low Fares"

Examine the "Hints on Obtaining Low Fares" provided by American Airlines.

  1. Most air travel can be categorized as either travel for vacation purposes or travel for business purposes. Which type of travel is most likely to satisfy the requirements for obtaining the lowest fares?
  2. Which of these requirements are most likely to exist as a mechanism for sorting customers according to their elasticity of demand?
  3. What does this suggest about the elasticity of demand for air travel by each type of travel? Why might this occur?
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