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how do airlines determine the price of a seat?¨ Which is more inelastic, vacation or business...

how do airlines determine the price of a seat?¨ Which is more inelastic, vacation or business travel and why??

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Answer #1

Airlines determine the price of seats depending on the demand and supply of the seats, they have dynamic pricing i.e. if the demand in the market is high the price of the seats will be high and if the demand are low the the seats will be offered at a low price.

Business travel are more inelastic because they are considered as of more value and important than the vacation. any person can delay its vacation plans if the price of tickets are high but business have a very high opportunity cost and they cannot be left.

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