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    analyze the price elasticity of demand for each group

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    Based on each group of travelers according to their price sensitivity, need help to analyze the price elasticity of demand for each group.

    Clear Blue Sky Airlines is under performing. The Raleigh-Durham to Chicago route is less profitable than our other routes.


    Concerns and policy...

    Please consider these fare restrictions in designing an appropriate price discrimination strategy for Clear Sky.

    Please see attached for full question.

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    Solution Preview

    Let's focus on the following four identifiable customer market segments:
    business, government, student, and leisure travelers.
    I think the "price sensitivity" actually means the price elasticity, because price elasticity of demand refers to the percentage change in the quantity of a commodity demanded or supplied compared to a percentage change in its price. In the case of demand elasticity, however, an increase in price causes a decrease in quantity. Accordingly, elasticity would be negative, so the following discussion uses the absolute value of the ...

    Solution Summary

    This posting assists with help to analyze the price elasticity of demand for each group.