Asked by Joseph Smith on May 29, 2024
Verified
Airlines charge a ____________price to business travelers compared to leisure travelers because business travelers have a ____________ demand than leisure travelers.
A) Higher;more elastic
B) Higher;less elastic
C) Lower;more elastic
D) Lower;less elastic
Business Travelers
Individuals who travel primarily for business purposes, often involving visits to different cities or countries.
Leisure Travelers
Individuals or groups traveling for non-business purposes, such as relaxation, vacation, or recreation.
Elastic Demand
A situation in which the demand for a product is sensitive to price changes.
- Gain an understanding of the principle of price discrimination and its assorted models.
- Acquire insight into the financial logic behind targeting certain groups with reductions in price.
Verified Answer
PA
Penny AlvarezMay 30, 2024
Final Answer :
B
Explanation :
Airlines charge higher prices to business travelers because they have less elasticity of demand than leisure travelers. Business travelers are less sensitive to price changes because they usually have less flexibility in their travel plans and need to travel regardless of the price. Leisure travelers, on the other hand, have more flexibility and can choose to travel at a different time or to a different destination if the prices are too high. Therefore, airlines can charge higher prices to business travelers without losing many customers, while they need to keep prices low to attract leisure travelers.
Learning Objectives
- Gain an understanding of the principle of price discrimination and its assorted models.
- Acquire insight into the financial logic behind targeting certain groups with reductions in price.
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