Page 5 of 8 c why do business travelers and leisure

Page 5 of 8

C. Why do business travelers and leisure travelers have different price elasticities of demand for airline
tickets? Explain using the concepts of demand being elastic/inelastic, necessities vs. luxuries, among
others. (4 points)
Question 2.
Suppose Country A and Country B can switch between producing toothbrushes and
producing hairbrushes at a constant rate. The table below illustrates the amount of time each country
requires to produce 1 unit of each good. (16 points)
Machine Minutes Needed to Make 1
Toothbrush Hairbrush
Country A
3
10
Country B 5 6
A. Which country has absolute advantage in the production of toothbrush ? Why? (3 points)
B. Which country has comparative advantage in the production of toothbrush ? Why? (5 points)