If the demand for air travel were to change so that business travelers and vacationers have thesame price elasticity of demand for air travel, A) airlines would charge the same price to each type of flyer. B) airlines would still charge business flyers a higher fare since the traveler's employer pays anyway. C) airlines would be driven out of business. D) airlines would counter by charging vacationers a higher fare.

The correct answer is B) airlines would still charge business flyers a higher fare since the traveler's employer pays anyway.

Even if business travelers and vacationers have the same price elasticity of demand, airlines could still charge business flyers higher fares due to other factors beyond elasticity. Price elasticity of demand measures how responsive the quantity demanded of a good is to a change in its price. Equal price elasticity between two groups does not equate to equal pricing because airlines also consider other factors such as willingness to pay, market segmentation, and the distinct travel patterns of business flyers versus vacationers.

Business travelers often have less flexibility in their schedules, needing to fly at specific times to meet work obligations, and may book flights on shorter notice. Additionally, because the employer often bears the cost of business travel, these travelers may be less sensitive to price changes compared to vacationers who are spending their own money. Therefore, airlines can take advantage of this by charging higher fares for business travelers who are less price-sensitive due to these reasons, despite having the same price elasticity of demand.