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# On an air rout, an ailine offers two classes of service - busienss (B)

Question # 00580097
Subject: Economics
Due on: 08/29/2017
Posted On: 08/29/2017 07:24 AM

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Price vs. Capacity Problem

On an air rout, an ailine offers two classes of service: busienss (B) and economy (E).

The respective demands are given by:

For B - P= 540-.5Q

For E - P= 380-.25Q

Because of ticketing restrictions business travelers cannot take advantage of economy's low fare. The airline operates two flights daily. Each Flight has a capacity of 200 passengers. The cost per flight is \$20,000.

a- How would the airline maximize the total revenue it obtains from the two flights.

b-What fares should the airline charge and how many passengers will buy tickets of each type? Keeping in mind that max revenue is obtained by setting MRb=MRe

c-Suppose the airline is conserving promoting a single "value fare" to all passengers on this route. Find the optimal single fare using spreadsheet optimizer.

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#### On an air rout, an ailine offers two classes of service - busienss (B)

Tutorial # 00578062
Posted On: 08/29/2017 07:24 AM
Posted By:
dr.tony
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