You have been appointed the new manager for Ghana Airways Company Limited, an international airline company that flies from the Kotoka International Airport in Accra to Heathrow Airport in London every day. The airline is described as a monopolist and has the possibility of discriminating between its Business and Economy Travelers. To help you price your services appropriately to maximize profit, you engaged an economist who estimated the demand function for both Economy and Business Travelers as: Q1 = 24 – 0.2P1 Economy Travelers Q2 = 10 – 0.05P2 Business Travelers Where Q1 and Q2 are the respective numbers of Economy and Business Travelers and P1 and P2 are their respective fares (in GH¢). If the Total Cost (TC) of this airline company for flying these two categories of travelers is given as TC = 35 + 40Q, where Q = Q1 + Q2 What can you say about the fares, number of travelers and profit of Ghana Airways Company Limited, with and without discrimination?
You have been appointed the new manager for Ghana Airways Company Limited, an
international airline company that flies from the Kotoka International Airport in Accra
to Heathrow Airport in London every day. The airline is described as a monopolist and
has the possibility of discriminating between its Business and Economy Travelers. To
help you price your services appropriately to maximize profit, you engaged an
economist who estimated the demand function for both Economy and Business
Travelers as:
Q1 = 24 – 0.2P1 Economy Travelers
Q2 = 10 – 0.05P2 Business Travelers
Where Q1 and Q2 are the respective numbers of Economy and Business Travelers and P1 and P2
are their respective fares (in GH¢). If the Total Cost (TC) of this airline company for flying these
two categories of travelers is given as TC = 35 + 40Q, where Q = Q1 + Q2
What can you say about the fares, number of travelers and profit of Ghana Airways Company
Limited, with and without discrimination?
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