Question

Why is price elasticity of demand negative for the airline industry but positive for income?

Why is price elasticity of demand negative for the airline industry but positive for income?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

When there is an increase in the price of airline tickets then the quantity demanded will fall. So, there exists an inverse relationship between the price and quantity demanded of airline tickets. Therefore, the price elasticity of demand is negative.

When there is an increase in income of consumers then the demand of airline tickets will increase. So, there exists a direct relationship between the price and quantity demanded. Therefore, the income elasticity of demand is positive.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The price elasticity of demand uses the absolute value because it is sometimes negative or always...
The price elasticity of demand uses the absolute value because it is sometimes negative or always negative .The income and cross elasticities of demand do not use the absolute value because they can be negative only, positive only or positive or negative The income elasticity of demand is positive for a normal or inferior good and negative for an inferior or normal good. The​ cross-price elasticity of demand is positive for complementary or substitute goods and negative for complementary or...
1. For each of the following say either "positive," "negative," or "either." a. The (price) elasticity...
1. For each of the following say either "positive," "negative," or "either." a. The (price) elasticity of demand. b. The (price) elasticity of supply. c. The cross-price elasticity for substitutues. d. The cross-price elasticity for compliments. e. The income elasticity for a normal good. f. The income elasticity for an inferior good. 2. When the price of good X goes from $20 to $25, the quantity goes from 100 to 65. a. What is the elasticity of demand? b. Is...
The difference between price elasticity of demand and income elasticity of demand is that A. income...
The difference between price elasticity of demand and income elasticity of demand is that A. income elasticity of demand examines how an​ individual's income changes when prices change and the price elasticity of demand examines how quantity demand changes when price changes. B. income elasticity measures the responsiveness of income to changes in supply while price elasticity of demand measures the responsiveness of demand to a change in price. C. income elasticity refers to a horizontal shift of the demand...
40) The cross elasticity of demand for butter and margarine is likely to be A) positive...
40) The cross elasticity of demand for butter and margarine is likely to be A) positive because they are substitutes. B) positive because they are complements. C) negative because they are substitutes. D) negative because they are complements. E) positive because they are normal goods. 41) If an increase in the price of green ketchup increases the demand for red ketchup, then A) red and green ketchup are substitutes. B) red and green ketchup are normal goods. C) the cross...
17. If income elasticity of demand is negative, then an increase in income would cause a...
17. If income elasticity of demand is negative, then an increase in income would cause a rightward / leftward shift of the demand curve. This product is a _____ good. If at a constant price, an increase in consumer income from $10,000 to $15,000 caused a decrease in demand from 200 units to 130 units, then the numeric value for income elasticity is _____ .
Cross-price elasticity of demand is a. negative for complementary goods. b. negative for substitute goods. c....
Cross-price elasticity of demand is a. negative for complementary goods. b. negative for substitute goods. c. positive for general goods. d. unitary for secondary goods.
Determine the price elasticity of demand, the cross-price elasticity of demand or the income elasticity in...
Determine the price elasticity of demand, the cross-price elasticity of demand or the income elasticity in the following scenarios. a. Consider the market for coffee. Suppose the price rises from $4 to $6 and quantity demanded falls from 120 to 80. What is price elasticity of demand? Is coffee elastic or inelastic? b. John’s income rises from $20,000 to $22,000 and the quantity of hamburger he buys each week falls from 2 pounds to 1 pound. What is his income...
Suppose the own price elasticity of demand for the products of an industry is (-0.7), and...
Suppose the own price elasticity of demand for the products of an industry is (-0.7), and the Rothschild Index is 0.15. What happens to the demand of a representative firm in this industry, if its price increases by 1%?
Suppose the own price elasticity of demand for good X is -3, its income elasticity is...
Suppose the own price elasticity of demand for good X is -3, its income elasticity is -2, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is -2. Determine how much the consumption of this good will change if: Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers. a. The price of good X decreases by 7 percent. b. The price of good Y increases by 10...
Suppose the own price elasticity of demand for good X is -5, its income elasticity is...
Suppose the own price elasticity of demand for good X is -5, its income elasticity is -1, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is 3. Determine how much the consumption of this good will change if: Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers. a. The price of good X decreases by 6 percent. percent b. The price of good Y increases by...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT