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    Airline Industry

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    ? Select an industry that is affected by the economy, such as the airline, automotive, home building, or technological industry. Keep in mind that you will use the industry chosen throughout the course.
    Find at least two sources to help you answer the following questions about the air line industry. in air line industry, is price elasticity of demand considered elastic or inelastic? Are there substitutes available? Is the good a luxury or a necessity? Explain. What is the price elasticity of supply for air line industry? Explain.
    ? Organize your research for this week using the annotated bibliography template in Appendix B. For each entry in the annotated bibliography, include an APA-formatted reference and a summary of the major points in the article or Web site.

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    Solution Preview

    Selected Industry: Airline

    Find at least two sources to help you answer the following questions about the air line industry. in air line industry, is price elasticity of demand considered elastic or inelastic? Are there substitutes available? Is the good a luxury or a necessity? Explain. What is the price elasticity of supply for air line industry? Explain.

    The elasticity of demand in Airline industry is highly elastic. However, it is not perfectly elastic because elasticity varies due to purpose of travel. The response of demand to changes in price depends on the purpose of the travel. Business travelers who are always short of time and have no other means but to resort to air travel have a less elastic demand as compared to leisure travelers because travel for leisure can always be postponed or avoided due to higher prices whereas business travel often cannot be avoided.

    Substitutes could add another dimension the highly elastic demand for airline travel. Substitutes are available in the airline industry, especially for shorter routes or routes within the ...

    Solution Summary

    Select an industry that is affected by the economy, such as the airline, automotive, home building, or technological industry. Keep in mind that you will use the industry chosen throughout the course.

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