The pricing insight it gives to the airline companies is to charge a lower price to the senior citizens because they have a relatively more elastic demand.
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that as prices increases, the quantity demanded decreases more than the percentage change in price.
Group of answer choices
Charge a lower price to the senior citizens because they have a relatively more elastic demand.
Charge a lower price to the students because they have a relatively more inelastic demand.
Charge a higher price to the senior citizens because they have a relatively more inelastic demand.
Charge a higher price to the students because they have a relatively more elastic demand.
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