Unformatted text preview: Things were not so rosy, however, when viewed from the other side of the border: American vacations had become 20 percent more expensive for Canadians. Canadians responded by vacationing in their own country or in other parts of the world besides the United States. Foreign travel is an example of a good that has a high price elasticity of demand. One reason is that foreign travel is a luxury good for most people—you may regret not going to Paris this year, but you can live without it… A second reason is that a good substitute for foreign travel typically exists—domestic travel. A Canadian who finds it too expensive to vacation in San Francisco this year is likely to find that Vancouver is a pretty good alternative....
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- Fall '10