Question
Please help explain how to solve this, thank you. A travel company Adventure Travels currently has 10 buses. There is a fixed cost of $10,000
Please help explain how to solve this, thank you.
A travel company Adventure Travels currently has 10 buses. There is a fixed cost of $10,000 for maintenance of the garage which houses 10 buses. The price per ticket is $40 for one trip and, at that price, demand for each trip is 50 passengers. Each bus has a capacity of 60 passengers. The travel company wants to set the price per ticket between $35 and $45. Prices will vary in whole numbers, i.e., $35, $36, etc. For every $1 increase in price, demand decreases by 2 passengers. For every $1 decrease in price, demand increases by 2 passengers per trip. Variable costs are $900 per trip. The company wants to add more buses. The total number of buses will range from at least 10 to a maximum of 20 buses. Addition of each new bus incurs an additional $1,000 on fixed cost. The garage has a maximum capacity of 20 buses. Assume one trip per bus for calculations.
Start with the original values. Each of the following options presents two combinations of ticket prices and number of buses. Each pair of combinations gives the same profits. Which option yields a profit of $2,000?
A. $35 and 15 buses; $40 and 12 buses
B. $35 and 10 buses; $40 and 20 buses
C. $39 and 16 buses; $40 and 15 buses
D. $36 and 11 buses; $37 and 20 buses
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