Question

Consider an airline that initially has a single price of $300 for all consumers. At this price, it has 120 business travelers and 90 tourists. The airline's marginal cost is $100. The slope of the business demand curve is -$2 per traveler, and the slope of the tourist demand curve is -$1 per traveler. Does the single-price policy maximize the airline's profit? If not, how should it change its prices?

Name: consider an airline that initially has a single price of 300 for all consumers at this price it has 120 business travelers and 90 tourists the airlines marginal cost is 100 the slope of the 37792
Uploaded: 2022-08-03T01:32:40-08:00
Duration: 2 min 51 s
Channel: Azat Nurmukhametov
Description: consider an airline that initially has a single price of 300 for all consumers at this price it has 120 business travelers and 90 tourists the airlines marginal cost is 100 the slope of the 37792

          Consider an airline that initially has a single price of $300 for all consumers. At this price, it has 120 business travelers and 90 tourists. The airline's marginal cost is $100. The slope of the business demand curve is -$2 per traveler, and the slope of the tourist demand curve is -$1 per traveler. Does the single-price policy maximize the airline's profit? If not, how should it change its prices?

Added by Alvaro P.

Principles of Economics

Gregory Mankiw 8th Edition

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Solved by Expert Azat Nurmukhametov

08/03/2022

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Consider an airline that initially has a single price of $300 for all consumers. At this price, it has 120 business travelers and 90 tourists. The airline's marginal cost is $100. The slope of the business demand curve is -$2 per traveler, and the slope of the tourist demand curve is -$1 per traveler. Does the single-price policy maximize the airline's profit? If not, how should it change its prices?