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Essay / Research Paper Abstract
A 5 page paper that discusses certain aspects of the airline industry. These include price elasticity of demand and supply; factors affecting the industry such as 9/11, fuel prices and the economy. The writer discusses the concepts of rival and excludable. Bibliography lists 7 sources.
Page Count:
5 pages (~225 words per page)
File: MM12_PGarltkp.rtf
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Unformatted sample text from the term paper:
demand decreases (Kaplan, 2002). This is known as the price elasticity of demand (Kaplan, 2002). The demand is directly related to the price. Price elasticity differs according to the necessity
of the product. For instance, oil products are more necessary than buying airline tickets for a vacation. Consumers continue to buy oil products even when the price escalates because these
products are essential for heat, fuel, etc. There are some goods consumers are not willing to give up or that they cannot give up because the price increases (Kaplan, 2002).
Oil is one of those types of products. Airline tickets for leisure trips are not. Airline tickets for businesspersons come close to being inelastic, however, businesspersons have many other ways
of having face-to-face meetings via technology (Rubin and Joy, 2005). But with 85 percent of all ticket sales being for leisure, it is leisure travel that keeps the industry operating
(Rubin and Joy, 2005). A product is referred to as highly elastic if a small change in the price significantly changes the quantity demanded or supplied (Investopedia, 2004). A
product is referred to as inelastic when a change in price results in minimal changes or no change in the quantity supplied or demanded (Investopedia, 2004). Changes in the price
of airline tickets affects the demand. Rubin and Joy (2005) reported that the demand elasticity for leisure travel is 2.4, which is high. Airlines have found that when ticket prices
increase by 10 percent, sales decline by 24 percent (Rubin and Joy, 2005). Furthermore, consumers most often select the lowest price they can find, regardless of carrier (Rubin and Joy,
2005). The price elasticity for business travel, by contrast, is a low 0.1, thus this price is inelastic (Rubin and Joy, 2005). As these authors point out, this could change
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