What is the market-level price elasticity of demand

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Suppose that the market for air travel between Raleigh and San Francisco is served by just two airlines, United and American. An economist has studied this market and has estimated that the demand curves for round-trip tickets for each airline are as follows:

(United Airlines Demand)

(American Airlines Demand)

Where  is the price charged by United Airlines and  is the price charged by American airlines.

(a) Suppose that both American airlines and United airlines charged a price of $600 for a round-trip ticket between Raleigh and San Francisco. What is the price elasticity of demand for United flights between Raleigh and San Francisco?

(b) What is the market-level price elasticity of demand for air travel between Raleigh and San Francisco when both airlines charge a price of $600? (Hint: You need to find the equation for the total demand. Since both airlines charge the same price)

Reference no: EM132440696

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