Queens Airlines (QA) has only one route: Cape to Cairo. The demand for each flightis ? = ??? ? .QA's cost of running each flight is $30 000plus $100 per passenger.

Q1. What is the profit-maximizing price that QA will charge?

[1]$100

[2]$300

[3]$450

[4]$500

Q2. How many people will be on each flight?

[1]500 people per fight

[2]200 people per fight

[3]1000 people per flight

[4]350 people per flight

Q3. What is QA's profit for each flight?

[1]$25 000 per fight

[2]$50 000 per flight

[3]$15 000 per flight

[4]$10 000 per flight

Q4. QA learns that the fixed costs per flight are in fact R41 000 instead of R30 000. Will the airline stay in business in the short run?

[1]Yes, an increase in fixed costs will not change profit maximizing price and quantity.

[2]No, it loses R1000 on each flight.

[3]No, it would rather lose R41 000 than stay in business.

[4]Not enough information given to make a decision

QA finds out that two different types of people fly to Cairo. Choice A consists of business people with a demand of?? = 260 0.4?. Choice B consists of students whose total demand is ?? = 240 0.6. Because the students are easy to spot, QA decides to charge them different prices.

Please answer questions 30 to 37 based on the information above.

Q1. What price does QA charge the students?

[1]$90

[2]$250

[3]$300

[4]$400

Q2. What price does it charge other customers?

[1]$110

[2]$375

[3]$650

[4]$1000

Q3. How many of each are aboard each flight?

[1]110 business people and 90 students

[2]100 business people and 100 students

[3]250 business people and 100 students

[4]650 business people and 400 students

Q4. What would QA's profit be for each flight?

[1]$ 900

[2]$ 2500

[3]$ 2750

[4]$ 41000

Q5. Calculate the consumer surplus of each consumer group.

[1]Consumer surplus for business people and students is $15 125 and $6750 respectively

[2]Consumer surplus for business people and students is $ 650 and $400 respectively

[3]Consumer surplus for business people and students is $ 10 000 for each group

[4]Consumer surplus for business people and students is $41 000 for each group.

Q6. What is the total consumer surplus?

[1]Total consumer surplus is $10 000

[2]Total consumer surplus is $15 025

[3]Total consumer surplus is $21 875

[4]Total consumer surplus is $41000

Q7. Before QA started differentiating customers, how much was the consumer surplus forbusiness peopleto air travel to Cairo?

[1]$650

[2]$1500

[3]$15 000

[4]$ 24500

Q8. What was the consumer surplus for students?

[1]$ 400

[2]$ 1250

[3]$ 1500

[4]$ 3000