Differentiate between demand and price

Assignment Help Finance Basics

Reference no: EM131438359

Question: The demand for airline travel is quite sensitive to price. Typically, there is an inverse relationship between demand and price; when price decreases, demand increases and vice versa. One major airline has found that when the price (P) for a round trip between Chicago and Los Angeles is $600, the demand (D) is 500 passengers per day. When the price is reduced to $400, demand is 1,200 passengers per day

a. Plot these points on a coordinate system and develop a linear model that relates demand to price.

b. Develop a prescriptive model that will determine what price to charge to maximize the total revenue.

c. By trial and error, can you find the optimal solution that maximizes total revenue?

Reference no: EM131438359

Questions Cloud

Warehouse health and safety risks : These include risks associated with layout, floors, heating, noise, housekeeping and fire. Review these risks, and in a two- to three-page paper (not including the title and reference pages), present a risk assessment of a warehouse.

Is value in emergency management objective or subjective : You are the emergency manager in a city with a population of 250,000 in the western United States. The director of economic development has asked for your assistance in creating his strategic plan. In terms of CIKR, an asset is a person, facility ..

What are advantages of increased access to medical records : What are the advantages and disadvantages of increased access to medical records? Base your essay on what you learned from the web site, what you learned about databases in this course.

Disadvantages of multi-channel distribution networks : As firms develop multi-channel distribution options, identify the advantages and disadvantages of multi-channel distribution networks.

Differentiate between demand and price : The demand for airline travel is quite sensitive to price. Typically, there is an inverse relationship between demand and price; when price decreases, demand increases and vice versa.

Professional appearance of the office : The work performance of the staff is adequate and he does not have to meet customers. However, a number of workers have complained that the professional appearance of the office is compromised. Recommend to Madam Looi some solutions on how to deal..

Is strategy defined in terms of product or process or both : Compare an expensive restaurant, a fast-food restaurant, and a cafeteria in terms of process characteristics. What are the strategies of the following organizations? Is the strategy defined in terms of product or process or both?

How bitlocker and bitlocker to go protect data : Discuss how BitLocker and BitLocker To Go protect data using the text Internet and/or your job as reference for full credit.

Harassment for a group of predominantly millennials : You have been asked by your boss to design a two-hour training program on harassment for a group of predominantly millennials. Which learning theory would you use to design it and what two or three things would you do to make sure that it transferred..

User Account

All Pages