An airline company determines the price of a seat on a particular route between city A and city B to be p = 200 + 0.02n, where p is the airfare price in euro and n is the number of airplane seats sold per day. The travel demand for this route by air has been found to be n = 4700 – 20p Q1 (A) Construct the demand curve for the specific air transportation market. Q1 ( B) Determine the equilibrium price charged and the number of seats sold per day, and the resulting revenues of the company. Q1 (C) Suppose that the airline company decides to connect city A with city B through an indirect flight service via a regional hub at city C. What are the implications of this decision from the company and customers’ viewpoint?
An airline company determines the
p = 200 + 0.02n,
where p is the airfare price in euro and n is the number of airplane seats sold per day.
The travel demand for this route by air has been found to be
n = 4700 – 20p
Q1 (A)
Construct the demand curve for the specific air transportation market.
Q1 ( B)
Determine the
Q1 (C)
Suppose that the airline company decides to connect city A with city B through an indirect flight service via a regional hub at city C. What are the implications of this decision from the company and customers’ viewpoint?
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