Economy, asked by Anonymous, 10 months ago

If increasing air fares increases revenues and decreasing them decreases revenues, then the demand for air travel has a price elasticity of:​

Answers

Answered by JackelineCasarez
3

The demand for air travel has a price elasticity of Zero(Inelastic).

Explanation:

  • When there is no change in the demand for a commodity or there is a very subtle change in the demand of a commodity with a change in its price, then it is called inelastic demand.
  • In the given situation, there is inelastic demand for air tickets as the increase in the price of fares leads to a rise in revenue, and a fall in price causes a fall in revenue.
  • This shows that the total expenditure increases due to a fall or rise in the price of fares but the demand remain the same. Therefore, the total expenditure increases with the increase in price and vice versa.

Learn more: price elasticity of demand

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