Which group of people would have a more elastic demand for air travel, business people or vacationers, why?

Answer 1

More elastic demand means they're more responsive to changes in price. I'd say vacationers, but only because there tends to be a larger subset of time-insensitive travel among vacationers than among business people.

You can delay a vacation by one week, but you can't delay a business deal.

Answer 2

To put this in simple terms, elasticity is determined by those whose demand for something changes depending on the supply/cost, etc. In this case the vacationers would have less elasticity for demand. Vacationers for the most part will want to travel when they can get the best prices for the trips they want to take. The maximum threshold for price for a vacationer will most likely be less than that of a business traveler.

Since the term business traveler implies the neccesity of travel, the business traveler's demand for air travel will be more elastic. As the price fluctuates, the demand for travel for the business traveler will remain the same. If travel for the business traveler is consistent, then the slope of the demand line approaches zero (horizontal line).

Answer 3

Vacationers have a more elastic demand. If tickets get cheaper, more people will fly (rather than drive to a vacation destination). Also, the people that would have flown anyway might plan more trips (weekend trips to NYC/ LA/ Vegas/ ...). If prices go up, people will get back in their cars again or travel less.
Business people need to make.. say 5 trips a year to a congress and a few clients. It doesn't matter if the tickets become more or less expensive - they need to make those (and only those) trips.

Answer 4

Aah, an Econ 101 question, the answer would be vacationers because business people have to travel for their business regardless of the price (which can be passed on to customers), but vacationers can put it off and adjust their schedules depending on price and convenience.