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

What is a valuation account, What is a valuation account? In accounting...

What is a valuation account? In accounting, an assessment consideration is usually a stability sheet consideration that is used in combination with another stability sheet cons

Profit and loss accounting, what does it mean by sales less of goods sold a...

what does it mean by sales less of goods sold and cost less of goods sold

Index number, Why index numbers serve as economic barometers?

Why index numbers serve as economic barometers?

What is an irrevocable letter of credit?, What is an irrevocable letter of ...

What is an irrevocable letter of credit? A permanent mail of credit score is a financial instrument used by banks to guarantee a customer's obligations to a supplier. It is perm

Frequcency, how can we construct a bivariate frequency distribution

how can we construct a bivariate frequency distribution

Financial decision making managers, Income statement: Sosa Corporation rece...

Income statement: Sosa Corporation recently reported an EBITDA of $31.3 million and $9.7 million of net income. The company has $6.8 million interest expense, and the corporate tax

Post-retirement health insurance, Post-retirement health insurance Some...

Post-retirement health insurance Some companies continue to provide insurance policy to workers after they have on. This one person benefit is considered to be part of the sett

Skewness, Skewness It is the comparison of the mean, median and mode ca...

Skewness It is the comparison of the mean, median and mode can reveal information about the characteristics of skewness. Definition The distribution of the data is ske

Cash flow analysis, Cash flow analysis In financial sales, an income rep...

Cash flow analysis In financial sales, an income report, also known as report of money runs or funds circulation report is a financial report that shows how changes in stability

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