An airline has two types of passengers: business passengers with fairly tight schedules and inelastic demand for airline flights and vacation passengers with flexible schedules and more elastic demand for airline flights. The tables below show the demand information for both types of passengers and the market demand for a single airline flight. Business Traveler Demand Vacation Traveler Demand Market Demand Same Price for All Passengers Price Quantity Demanded Marginal Revenue (dollars) (seats) (dollars) Price (dollars) Quantity Demanded Marginal Quantity Marginal (seats) Revenue (dollars) Price (dollars) Demanded Revenue (seats) (dollars) $500 0 $500 0 $500 0 450 25 $400 450 0 450 25 $400.00 400 50 300 400 0 -- 400 50 300.00 es 350 75 200 350 50 $300 350 125 266.67 300 100 100 300 100 200 300 200 166.67 250 125 0 250 150 100 250 275 66.67 200 150 200 200 0 200 350 16.67 150 175 150 250 150 425 100 200 100 300 100 500 50 225 50 350 50 575 0 250 0 400 0 650 Instructions: Enter your answers as a whole number. a. If the airline can charge only one price to all passengers and its marginal cost of supplying a seat on a flight is $300, it will sell seats and charge a price of $ for each seat. b. If the airline can charge different prices to the two different types of passengers and its marginal cost of supplying a seat is still $300 per seat, business travelers will buy seats at a price of $ per seat and vacation travelers will buy seats at a price of $ per seat.
An airline has two types of passengers: business passengers with fairly tight schedules and inelastic demand for airline flights and vacation passengers with flexible schedules and more elastic demand for airline flights. The tables below show the demand information for both types of passengers and the market demand for a single airline flight. Business Traveler Demand Vacation Traveler Demand Market Demand Same Price for All Passengers Price Quantity Demanded Marginal Revenue (dollars) (seats) (dollars) Price (dollars) Quantity Demanded Marginal Quantity Marginal (seats) Revenue (dollars) Price (dollars) Demanded Revenue (seats) (dollars) $500 0 $500 0 $500 0 450 25 $400 450 0 450 25 $400.00 400 50 300 400 0 -- 400 50 300.00 es 350 75 200 350 50 $300 350 125 266.67 300 100 100 300 100 200 300 200 166.67 250 125 0 250 150 100 250 275 66.67 200 150 200 200 0 200 350 16.67 150 175 150 250 150 425 100 200 100 300 100 500 50 225 50 350 50 575 0 250 0 400 0 650 Instructions: Enter your answers as a whole number. a. If the airline can charge only one price to all passengers and its marginal cost of supplying a seat on a flight is $300, it will sell seats and charge a price of $ for each seat. b. If the airline can charge different prices to the two different types of passengers and its marginal cost of supplying a seat is still $300 per seat, business travelers will buy seats at a price of $ per seat and vacation travelers will buy seats at a price of $ per seat.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:An airline has two types of passengers: business passengers with fairly tight schedules and inelastic demand for airline flights and
vacation passengers with flexible schedules and more elastic demand for airline flights. The tables below show the demand
information for both types of passengers and the market demand for a single airline flight.
Business Traveler Demand
Vacation Traveler Demand
Market Demand Same Price for All Passengers
Price
Quantity
Demanded
Marginal
Revenue
(dollars) (seats)
(dollars)
Price
(dollars)
Quantity
Demanded
Marginal
Quantity
Marginal
(seats)
Revenue
(dollars)
Price
(dollars)
Demanded
Revenue
(seats)
(dollars)
$500
0
$500
0
$500
0
450
25
$400
450
0
450
25
$400.00
400
50
300
400
0
--
400
50
300.00
es
350
75
200
350
50
$300
350
125
266.67
300
100
100
300
100
200
300
200
166.67
250
125
0
250
150
100
250
275
66.67
200
150
200
200
0
200
350
16.67
150
175
150
250
150
425
100
200
100
300
100
500
50
225
50
350
50
575
0
250
0
400
0
650
Instructions: Enter your answers as a whole number.
a. If the airline can charge only one price to all passengers and its marginal cost of supplying a seat on a flight is $300, it will sell
seats and charge a price of $
for each seat.
b. If the airline can charge different prices to the two different types of passengers and its marginal cost of supplying a seat is still
$300 per seat, business travelers will buy seats at a price of $
per seat and vacation travelers will buy
seats at a
price of $
per seat.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education