Suppose there are two types of passengers: business travelers (B) and vacationers (V). The demands for airline tickets between Chicago and New York for both types of passengers are illustrated in the graph to the right. If an airline can price discriminate between the two types, then it should charge an airline ticket price of $ to business travelers (enter a numeric response using an integer) Price and cost (dollars per airline ticket) 800 750- 700- 650- 600- 550- www 500- 8900 450- 400- 350- 300- 250 200- 150 100- 50- of 0 -MC Dv MRB MRV DR WHYTA R 100 200 300 400 500 600 700 800 900 1000 Quantity of airline tickets

Suppose there are two types of passengers: business travelers (B) and vacationers (V). The demands for airline tickets between Chicago and New York for both types of passengers are illustrated in the graph to the right. If an airline can price discriminate between the two types, then it should charge an airline ticket price of $ to business travelers (enter a numeric response using an integer) Price and cost (dollars per airline ticket) 800 750- 700- 650- 600- 550- www 500- 8900 450- 400- 350- 300- 250 200- 150 100- 50- of 0 -MC Dv MRB MRV DR WHYTA R 100 200 300 400 500 600 700 800 900 1000 Quantity of airline tickets

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The daily demand for movie rental from a movie theatre operator Silver Screen is given by the equation P = 5 - 0.5Q, where P is the price in dollar ($) and Q is the quantity demanded. The manager of Silver Screen claims that consumers are always sensitive to the price of movie rental and hence the company should always reduce the price to earn more revenues. Is this claim valid? What should the manager do to maximise the revenue? Explain.
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Example 2: In fall of 2011, the National Christmas Tree Association decided to impose a fee/tax of $0.15 per tree sold.² They claimed the tax revenue raised would fund a new marketing campaign for Christmas tree growers in response to growing plastic tree imports. The proposal quickly drew controversy: some argued that the fee/tax would be passed along in higher prices to consumers, but the National Christmas Tree Association says no. How does the answer to this question depend on the assumption about the price elasticity of demand? a. Consider two graphs of the market for Christmas trees. The supply curve in each market is assumed to be the same. In the left graph, assume the price elasticity of demand is relatively inelastic and in the right graph, assume the price elasticity of demand is relatively elastic. Add labels on your diagram to identify the equilibrium price and quantity of trees before the tax. b. Now, suppose retailers are assessed a tax of amount for each tree sold.…
The following table indicates the demand schedules for four types of consumers A, B, C, and D and the number of consumers in each group (top row). The quantity demanded by each type of comuner (GxGO and O shown for market prices ranging from $10 down to $4 What is the combined quantity demanded at a market price of $77 Number of Consumers A = 200 B=300 Q C=300 D=200 Market Price QA Q Q $10 D 0 1 1 D 1 2 3 1 3 3 3 4 7 $ 9 6 11 OC 4700 OD 3.000 OA 25.000 4.750 9 S 2 3 4 5 MI 5 8 11 16 20
The diagram to the right illustrates a hypothetical demand curve representing the relationship between price (in dollars per unit) and quantity (in 1,000s of units per unit of time). 100- 90- Total revenue is $ (Enter your response as an integer.) 80- 70- 60 60- 50- 40- 30- 20- 10- D 30 0- 10 20 30 40 50 60 70 80 90 100 Quantity (1,000s of units per unit of time) Price (dollars per unit)
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Explain two factors that determine a buyer’s reservation price? No more than 3 lines
Please do not give solution in image formate thanku. The demand for airline travel is quite sensitive to price. Typically, there is an inverse relationship to between demand and price; when price decreases, demand increases and vice versa. One major airline has found that when the price (p) for a round trip between Chicago and Los Angeles is $600, the demand (D) is 500 passengers per day. When the price is reduced to $400, demand is 1,200 passengers per day. Use a data table to estimate the price that maximizes total revenue.
The average ticket price for a concert at the opera house was $30. The average attendance was 5000. When the ticket price was raised to $33, attendance declined to an average of 4700 persons por performance. What should the ticket price be to maximize revenue for the opera house? (Assume a linear demand curve.) To maximize revenue, the price should be $ por ticket. (Type an integer or decimal rounded to two decimal places as needed. Simplify your answer.)
Q. Wilpen Company, a price-setting firm, produces nearly 80 percent of all tennis balls purchased in the United States. Wilpen estimates the U.S. demand for its tennis balls by using the following linear specification: Q = a + bP + cM + dPR. Where Q is the number of cans of tennis balls sold quarterly, P is the wholesale price Wilpen charges for a can of tennis balls, M is the consumers’ average household income, and PR is the average price of tennis rackets. The regression results are as follows: a- Discuss the statistical significance of the parameter estimates a^, b^, c^, and d^ using the p-values. Are the signs of b^, c^, and d^ consistent with the theory of demand? Wilpen plans to charge a wholesale price of $1.65 per can. The average price of a tennis racket is $110, and consumers’ average household income is $24,600. b. What is the estimated number of cans of tennis balls demanded? c) At the values of P, M, and Pr given, what are the estimated values of the price (E^), income…
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The diagram to the right shows a hypothetical demand curve for apples. The slope of this curve is response rounded to two decimal places. Include minus sign if appropriate.) (Enter your Price (dollars per bushel) 100.00 90.00 80.00- 70.00- 60.00- 50.00 40.00 30.00 20.00- 10.00+ Demand Curve for Apples 0.00 0 10 20 30 40 50 60 70 80 90 100 Quantity (bushels per week)