Changes

Consider further the impact of a price increase on the same route that is due only to an increase in fuel costs.  Will those price increases have the same elasticity?  (No, because the alternative of traveling by car increases in cost by a similar amount.  But demand will decrease anyway, because some people will simply stay at home rather than travel.)

Consider further the impact of a price increase on the same route that is due only to an increase in fuel costs.  Will those price increases have the same elasticity?  (No, because the alternative of traveling by car increases in cost by a similar amount.  But demand will decrease anyway, because some people will simply stay at home rather than travel.)

==For Honors Students Only, Concerning Calculating Elasticities==

===For Honors Students Only, Concerning Calculating Elasticities===

There is an ambiguity in calculating the percentage change in price or quantity.  What should be used as the denominator in deriving the percentages?  If $100 increases to $110, then the percent change could be described as $10/$100 x 100% or $10/$110 x 100%.  Above we used the initial price and quantity as the denominator, but we could have used the final price and quantity as the denominator instead.

There is an ambiguity in calculating the percentage change in price or quantity.  What should be used as the denominator in deriving the percentages?  If $100 increases to $110, then the percent change could be described as $10/$100 x 100% or $10/$110 x 100%.  Above we used the initial price and quantity as the denominator, but we could have used the final price and quantity as the denominator instead.