4. (1). With higher fuel costs, airlines raised their average fare from $0.75 to $1.25 per passenger kilometer d the number of passenger kilometers decreased from 2.5 million a day to 1.5 million a day. What is the price asticity of demand for air travel over this price range? Do you think raising their average fare is the correct icing strategy by airlines companies? Why?

4. (1). With higher fuel costs, airlines raised their average fare from $0.75 to $1.25 per passenger kilometer d the number of passenger kilometers decreased from 2.5 million a day to 1.5 million a day. What is the price asticity of demand for air travel over this price range? Do you think raising their average fare is the correct icing strategy by airlines companies? Why?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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