Question

Suppose that Pakistan International Airline and Serene Air have the following demand for tickets from Karachi...

  1. Suppose that Pakistan International Airline and Serene Air have the following demand for tickets from Karachi to Islamabad during the COVID-19 crises.

Price

Quantity Demanded

(Pakistan International Airline)

Quantity Demanded

(Serene Air)

Rs.15,000

2000 Tickets

4100 Tickets

Rs. 20,000

1600

4000

Rs. 25,000

1200

3800
  1. As the price of tickets rises from Rs. 20,000 to Rs. 25,000 due to COVID-19 crises, what is the price elasticity of demand for (a) Pakistan International Airline and (b) Serene Air? (Use the midpoint method in your calculations.
  2. Based on the above information, how would you recommend to both airlines for increasing the revenue? (3Marks- 50-200 words)
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