[Solved] An Airline Knows That Business Travelers Have More Inelastic Demand
An airline knows that business travelers have more inelastic demand for travel than vacationers.That is,business travelers are often willing to pay more for airline tickets than vacationers.The airline also knows that business travelers do not like to travel over weekends.When customers request airline tickets that do not involve travel over a weekend,the airline determines that a traveler is likely a business traveler and charges a higher price.This is an example of
A) moral hazard.
D) adverse selection.
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