Question

Air Shangrila sells to both tourist and business travelers on its single route. Tourists always stay over on Saturday nights, while business travelers never do. The weekly demand function of tourists is QdT=6,000−10P, and the weekly demand function of business travelers is QdB=3,000−4P. Let the marginal cost of a ticket be $200. Suppose Air Shangrila has scheduled only 1,329 seats per week on its route. Instructions: Round your quantities to the nearest whole number and prices to 2 decimal places.

a. How many of those seats should it sell to tourists and business travelers, respectively?

Qtourist = seats.

Qbusiness = seats.

b. What will its prices be?

Ptourist = $.

Pbusiness = $.

Answer 1

Given:

QdT=6,000−10P,

QdB=3,000−4P

QdT + QdB = 1329

Revenue =

We have

Revenue =

MC = 200