What is the airlines profit maximizing fare

Reference no: EM13187483

as the exclusive carrier on a local airline route, a regional airline must determine the number of flights it will provide and the fare it will charge. Taking into account operating and fuel costs, airport changes, and so on, the estimated cost per flight is $2,000.00. It expects to fly full flights (100 passengers), and its marginal cost on a per passenger basis is $20.00. Finally, the airline's estimated demand curve is P=120 - (0.1*Q), where P is the fare in dollars, Q is the number of passengers per week.
a) what is the airline's profit maximizing fare? How many passengers does it carry per week using how many flights? What is its weekly profit?
b) suppose the airline is offered $4,000.00 per week to haul freight along the route for a local firm. This will mean replacing one of the weekly passenger flights with a freight flight (at the same operating cost). Should the airline carry freight for the local firm? Explain.

Reference no: EM13187483

Questions Cloud

Use enthalpy date for ethane and butane-gas stream : A gas stream containing 60wt% ethane and 40wt% butane is to be heated from 150K to 250K at a pressure of 5 bars. calculate the required heat input per kg of the mixture, neglecting Ep and Ek. use enthalpy date for ethane and butane

When the major taxi companies lowered their prices : a limo company specializes in transporting people to and from the airport. It competes with local taxi and public transporation as well as people deciding to drive their own cars. The demand for the firms services has been increasing as more consu..

Prosocial behavior and altruism : Consider and discuss how the phenomena of prosocial behavior and pure altruism relate to each other and how they differ from each other.

Calcuate the price elasticity of demand for coffee : The initial price of cup of coffee is $1.00 and at that price, 400 cups are demanded. If the price falls to .90, the quanity demanded will increase to 500. a) calcuate the (arc) price elasticity of demand for coffee

What is the airlines profit maximizing fare : as the exclusive carrier on a local airline route, a regional airline must determine the number of flights it will provide and the fare it will charge. Taking into account operating and fuel costs, airport changes, and so on, the estimated cost pe..

Satisfied workers are productive workers : Assume you are new to your job and on the first day you have a conversation with your boss, who says, “Satisfied workers are productive workers.” Do you agree with her statement? Why? Why not?

What is information contained in an in different curve : what is information contained in an in different curve why are such curves (a) downward slopping and b convex to origin? why does total utility increase as the consumer moves to indifferent curve further from the origin why cant indifferent curves..

Traditional hazard : Two major differences between a traditional hazard such as the 2007 California Wildfires and the terrorist-related hazards associated with the Aum Shinrikyo Sarin Gas attack on the Tokyo Subway that occurred in March of 199

Compute the final pressure and the number of moles : calculate the final pressure and the number of moles of H2 in each flask

User Account

All Pages