Can anyone help me??? I have to answer this question:
This is an excerpt from Wall Street Journal:
Instead of relying on round trip fare of about $2,000 between Cleveland and Los Angeles…Continental Airlines since June has offered a $716 fare in that market… .
Until October, the test (price cut) resulted in about the same revenue that Continental thinks it would have collected with its higher fare.
What is the elasticity of demand on this airline route? Is Continental likely to be better off charging the low fare or the high fare? Briefly explain.