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The 5pm flight on Friday from Washington to Chicago has 250 seats. The airline offers a high fare and a low fare. The low-fare customers
The 5pm flight on Friday from Washington to Chicago has 250 seats. The airline offers a "high fare" and a "low fare". The low-fare customers (such as tourists) always buy in advance. Moreover, there is ample demand for the low-fare seats, which the airline sells for $450 each. However, the customers who purchase the tickets at a high-fare are often business executives who make their travel plans very close to the departure date (and hence are willing to spend more than the low-fare customers). The airline charges $700 for each such high-fare seat sold. The demand from the high-fare customers is Normally distributed with a mean of 100 and a standard deviation of 40. In order to prevent all seats being booked by the less profitable low-fare customers, the airline reserves some seats for the more profitable high-fare customers. How many seats should the airline reserve for high-fare customers? Group of answer choices 0 85 115 135 165 250
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