Scenario 14-5
An airline knows that there are two types of travelers: business travelers and vacationers.For a particular flight,there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket.There are 150 seats available on the plane.Suppose the cost to the airline of providing the flight is $20,000,which includes the cost of the pilots,flight attendants,fuel,etc.
-Refer to Scenario 14-5.How much profit will the airline earn if it sets the price of each ticket at $600?

Question

Quizplus · Accepted Answer

The airline will earn $600 from each of the 100 business travelers, for a total of $60,000. The airline will also earn $300 from each of the 50 vacationers, for a total of $15,000. The total revenue from the flight will be $60,000 + $15,000 = $75,000. The cost of the flight is $20,000, so the profit will be $75,000 - $20,000 = $40,000.

Scenario 14-5 An Airline Knows That There Are Two Types of Travelers