Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

FlyExclusive is a company that offers memberships for access to chartered private jets. They are trying to decide the optimal price for their membership fee

FlyExclusive is a company that offers memberships for access to chartered private jets. They are trying to decide the optimal price for their membership fee and are considering using a two-part tariff. They estimate consumer demand to be: Q = 100 - 0.1P (or P = 1000 - 10Q), where Q is the number of charted jet flights per year and P is the price per flight. If the marginal cost of serving each customer is $100 per flight, what is the optimal two-part tariff that FlyExclusive should charge?

Group of answer choices

a) Membership fee = $50,000; P = $100 for each flight.

b) Membership fee = $40,050; P = $100 for each flight.

c) Membership fee = $50,000; P = $0 for each flight.

d) P = $550 for each flight, no membership fee.

e) Membership Fee = $50,000, P = $550 for each flight.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Environmental And Natural Resource Economics International Edition

Authors: Thomas H Tietenberg, Lynne Lewis

10th Edition

1292060794, 9781292060798

More Books

Students also viewed these Economics questions