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 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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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