Economics 9708 · AS & A Level · Cross elasticity of demand

Cross elasticity of demand — practice question

A family is prepared to pay up to $600, $500 and $400 for air tickets for the mother, father and daughter so they can travel to another city for a wedding. The airline offers a promotional air fare of $450 per ticket, on condition that at least three tickets are bought. If the family takes up this promotional offer, what consumer surplus will they gain?

  • A$100
  • B$150
  • C$200
  • D$250

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