Price elasticity of demand can be calculated using the formula:
Price Elasticity of Demand = (% Change in Quantity Demanded) / (% Change in Price)
Given that airline ticket prices decreased by 20% and flights increased by 30%, the percentage change in price would be -20% and the percentage change in quantity would be +30%.
Plugging these values into the formula:
Price Elasticity of Demand = (30%) / (-20%)
Price Elasticity of Demand = -1.5
Therefore, the price elasticity of demand for airline tickets in this scenario is -1.5, indicating that the demand for airline tickets is relatively elastic.
