With Higher Fuel Costs, Airlines Raise Their Average Fare from $0.50

Multiple Choice

With higher fuel costs, airlines raise their average fare from $0.50 to $1.50 per passenger kilometre and the number of passenger kilometres decreases from 2.5 million a day to 1.5 million a day. Over this price range, demand is

A) perfectly elastic.
B) perfectly inelastic.
C) unit elastic.
D) elastic, but not perfectly elastic.
E) inelastic, but not perfectly inelastic.