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the effects of two different prices on the number of seats expected to be sold and the variable cost per ticket, including the commission paid
the effects of two different prices on the number of seats expected to be sold and the variable cost per ticket, including the commission paid to travel agents: (Click the icon to view the pricing and ticket information.) (Click the icon to view additional information.) Read the requirements. Requirement 1. If you could charge different prices to business travelers and pleasure travelers, would you? Show your computations. Before determining if you would charge different prices to business travelers and pleasure travelers, calculate the total contribution margin at each price for each type of traveler. Air Eagle would maximize contribution margin and operating income by charging business travelers a fare of , where business travelers are charged [ and pleasure travelers a fare of r pleasure travelers. Air Eagle would maximize contribution margin and operating income by Requirement 2. Explain the key factor (or factors) for your answer in requirement 1. Business travelers are relatively price because they must get to their destination during the week (exclusive of weekends) and their fares are paid by their companies. Pleasure travelers are price (Round the percentages to the nearest tenth percent, X.X\%.) An increase in fares from $500 to $2,000 will deter only % of the business passengers from flying with Air Eagle. In contrast, a similar fare increase will lead to a(n)% drop in pleasure travelers. The drop in demand for the pleasure travelers offset by the total contribution margin for pleasure travelers. Answer true or false to the following two statements in regards to how Air Eagle can implement price discrimination. Airlines can require that a Saturday night stay is needed to qualify for the $500 discount fare. This requirement would discriminate between the passenger categories. The statement above is illegal because airlines are service companies rather than manufacturing companies and because these practices destroy competition. because they have to pay for their own airfare. Data table
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