The following table shows the daily demand schedule for round-trip flights between Houston and New York City for business travelers: Demand Schedule of Business Travelers Price QD $1,000 300 $800 500 $500 800 $300 1,000 Suppose an airline’s marginal cost per seat for the round-trip flight is $300. For profit-maximization, how much the airline should charge per round-trip? Show your process. (Hint: Apply the “half-way rule” of MR for monopoly).

The demanded quantity of any commodity reflects the amount of that commodity an individual is…

Answered: The following table shows the daily…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter14: Indirect Price Discrimination

Section: Chapter Questions

Problem 14.2IP

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The following table shows the daily demand schedule for round-trip flights between Houston and New York City for business travelers: Demand Schedule of Business Travelers Price QD $1,000 300 $800 500 $500 800 $300 1,000 Suppose an airline’s marginal cost per seat for the round-trip flight is $300. For profit-maximization, how much the airline should charge per round-trip? Show your process. (Hint: Apply the “half-way rule” of MR for monopoly).

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