Determine the price rate-demand , Basic Statistics

Assignment Help:

SkyyMarley Airlines has determined that the price elasticity of demand for two customer segments (Coach and Business Class) is -1.35 and -2.50.  Based on their expectations of profitability, SkyyMarley realizes the price of a Coach seat should be $175 (one way).  How much should SkyyMarley charge for a Business Class ticket?  (

The relation between elasticity, P and MC when profits are maximized is

MC= P(1-1/e) where is the absolute value of elasticity of demand.

For a coach seat

MC= 175( 1-1/1.35 )= 45.37

Assuming MC is same for business class

P= MC/ (1-1/e) = 45.37 /(1-1/2.5) = 75.616-it can charge this price for business class

 


Related Discussions:- Determine the price rate-demand

calculate the merger premium, Consider the following pre-merger informatio...

Consider the following pre-merger information concerning two firms, Mokhaba Manufacturers and Mabhida Merchants:  Data

Regression Analysis, I have a regression analysis assignment using minicab,...

I have a regression analysis assignment using minicab, but I am not sue how to do with my current data set?

Hypothesis testing.., Miller (2008) examined the energy drink consumption o...

Miller (2008) examined the energy drink consumption of college undergraduates and found that males use energy drinks significantly more often than females. To further investigate t

Circular motion, Explain why large lorries carrying heavy loads may not suc...

Explain why large lorries carrying heavy loads may not succed to go through a curve safely

Estimate the probability, A football coach recorded in the practice session...

A football coach recorded in the practice sessions how many attempts were needed for a certain player to kick a field goal from the 25-yard line, and got the following numbers 3

Meaning of book keeping, What do you understand by the term “Book Keeping”?...

What do you understand by the term “Book Keeping”? Ans. In nutshell the attending the Accounting Process is called or referred as Book Keeping in other plain words we may concern

Accounting equation, received security deposits from tenant how does it wil...

received security deposits from tenant how does it will be shown in accounting equation

What are saturn’s rings like, What are Saturn’s rings like? - Saturn’s ri...

What are Saturn’s rings like? - Saturn’s rings are made of tiny icy objects ranging from particles to boulders each orbiting Saturn independently like a tiny moon. They lie in S

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd