Air Shangrila sells to both tourist and business travelers on its single route. Tourists always buy their
Question:
QdT = 6,000 - 10P
And the weekly demand function of business travelers is
QdB = 1,000 - P
If the marginal cost of a ticket is $200, what prices should Air Shangrila set for its tourist ticket, which requires a three-week advance purchase, and its business ticket? If the government passes a law that says all tickets must come to the same amount, what price will Air Shangrila set? What would be the elasticities of demand for the two groups at that price?
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Prices Air Shangrila should set for its tourist ticket and its business ticket P tourist 350 P business 425 If the government passes a law that says a...View the full answer
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