Different elasticity of demand between these two groups

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Reference no: EM13892085

As you know, airlines practice price discrimination by charging leisure and business travelers with different prices. They could do so because of the different elasticity of demand between these two groups of travelers. Different customers pay varying prices for essentially the same coach seat because some passengers qualify for discounts and others do not. Since the discounts are substantial in many cases, the customer who qualifies for a discount pays a significantly lower airfare. Now, please answer the following question:

Is this consistent with profit-maximization? Given the current high cost of jet fuel, will you continue this practice? Why or why not? Please explain.

Reference no: EM13892085

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