Managerial Economics: Applications, Strategy and Tactics 12th Edition by James McGuigan, Charles Moyer, Frederick Harris

Exercise 2

The price elasticity of demand for air travel differs radically from first-class ( 1.3) to unrestricted coach ( 1.4) to restricted discount coach ( 1.9). What do these elasticities mean for optimal prices (fares) on a cross-country trip with incremental variable costs (marginal costs) equal to $120