Delta Airlines has estimated that the cross-price elasticity of demand between t
ID: 1158479 • Letter: D
Question
Delta Airlines has estimated that the cross-price elasticity of demand between the number of tickets sold for their early morning flight Denver-Atlanta and the price of their early afternoon flight Atlanta-JFK is -1.6. Delta would like to increase the quantity of tickets in the Denver-Atlanta flight by 20%. Based on this information, Delta can accomplish this by
An increase in the price of the Atlanta-JFK flight by 20%.
An increase in the price of the Atlanta-JFK flight by 12.5%.
A decrease in the price of the Atlanta-JFK flight by 12.5%.
A decrease in the price of the Atlanta-JFK flight by 20%.
Delta Airlines has estimated that the cross-price elasticity of demand between the number of tickets sold for their early morning flight Denver-Atlanta and the price of their early afternoon flight Atlanta-JFK is -1.6. Delta would like to increase the quantity of tickets in the Denver-Atlanta flight by 20%. Based on this information, Delta can accomplish this by
A)An increase in the price of the Atlanta-JFK flight by 20%.
B)An increase in the price of the Atlanta-JFK flight by 12.5%.
C)A decrease in the price of the Atlanta-JFK flight by 12.5%.
D)A decrease in the price of the Atlanta-JFK flight by 20%.
An increase in the price of the Atlanta-JFK flight by 20%.
An increase in the price of the Atlanta-JFK flight by 12.5%.
A decrease in the price of the Atlanta-JFK flight by 12.5%.
A decrease in the price of the Atlanta-JFK flight by 20%.
Delta Airlines has estimated that the cross-price elasticity of demand between the number of tickets sold for their early morning flight Denver-Atlanta and the price of their early afternoon flight Atlanta-JFK is -1.6. Delta would like to increase the quantity of tickets in the Denver-Atlanta flight by 20%. Based on this information, Delta can accomplish this by
A)An increase in the price of the Atlanta-JFK flight by 20%.
B)An increase in the price of the Atlanta-JFK flight by 12.5%.
C)A decrease in the price of the Atlanta-JFK flight by 12.5%.
D)A decrease in the price of the Atlanta-JFK flight by 20%.
Explanation / Answer
Answer is Decrease in Price of Atlanta-JK flight by 12.50% Explanation:; Cross elasticity of demand: -1.60 Cross elasticity of demand: % change in demand of denver / % change in Price of Atlanta (-1.60) = 20% / % change in price of Atlanta % change in price of Atlanta: -12.50% (decrease)
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