SCENARIOS Continental Lite

Multiple Choice

SCENARIOS
Continental Lite
In the mid-1990s,Continental Airlines chose to compete head-on with Southwest Airlines by launching Continental Lite,an alternative low-fare commercial airline passenger operation.Top executives at Continental had expected its no-frills operation to break even within a year of its inception,but the airline fell short of the goal.A source close to the company explained it by saying,"Its costs were too high,and its revenues were too low." Some observers criticized Continental's marketing efforts.When the no-frills service was first launched,it lacked a distinct name or identity,missing its chance to make a splash.Then Continental tried to sell three "brands" at once--Lite,a new premium service,and its more traditional long-haul domestic flights.As one rival expressed it,"You cannot be all things to all people."
-Refer to Continental Lite.Consumers who traveled on Continental Lite or Southwest were very sensitive to price changes.This suggests:

A) inelastic demand
B) elastic supply
C) elastic demand
D) inelastic supply
E) unitary elasticity