Each month, an airline sells 1,500 business-class tickets from London to Paris at the price $200 per ticket and 6,000 economy-class tickets at the price $80 per ticket a

Subject:EconomicsPrice:2.87 Bought7

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Each month, an airline sells 1,500 business-class tickets from London to Paris at the price $200 per ticket and 6,000 economy-class tickets at the price $80 per ticket

a. Use this information to derive demand functions of business travelers and economy class tourists, respectively, knowing that demand curves for both groups are linear and that the marginal cost of a ticket is constant and equal to $50.

b. Are the different prices justified by differences in price elasticities of demand between the two groups? Calculate these elasticities and explain.