A major airline estimates that the demand and marginal revenue functions for first-class and excursion fares from New York to Paris are: First class : 11eb7369_6a73_db75_9c10_6787b7ccd9bd_SM2911_00 If the marginal cost of flying is $200 per passenger, what fare and what number of passengers will maximize profit? Show that profit is greater than if the airline used a single or uniform price.

Managerial Economics 2nd Edition by William Boyes

Edition 2ISBN: 978-0618988624

Managerial Economics 2nd Edition by William Boyes

Edition 2ISBN: 978-0618988624

Exercise 2

A major airline estimates that the demand and marginal revenue functions for first-class and excursion fares from New York to Paris are: First class :

If the marginal cost of flying is $200 per passenger, what fare and what number of passengers will maximize profit? Show that profit is greater than if the airline used a single or uniform price.

Explanation

Verified

Profit maximization:
The main goal of t...