16. Suppose an airline determines that its customers traveling for business have

Question

16. Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should a. increase the price charged to vacationers and decrease the price charged to business travelers b. decrease the price charged to vacationers and increase the price charged to business travelers c. decrease the price to both groups of customers. d. increase the price for both groups of customers.

Explanation / Answer

"B"

Decrease the price charged to vacationer and increase the price changed to business travelers. It will increase the demand by vacationers increasing the revenue and as the business travelers have an inelastic demand it will get them more revenue at a higher price.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.