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Duck Airlines charges all passengers the same $400 fare on one of its routes The average flight carries 60 people in a plane with a capacity of 100 One third of the flyers are business travelers and

Duck Airlines charges all passengers the same $400 fare on one of its routes. The average flight carries 60 people in a plane with a capacity of 100. One third of the flyers are business travelers and two thirds are leisure travelers. A bright, young economist tells the airline that it should engage in price discrimination. She estimates that if it increases the business fares by 10%, it will lose 5% of the business flyers; and, if it reduces leisure fares by 10% it will increase leisure traffic by 20%. Calculate the total revenue of Duck under their current one-price plan and under the price discrimination plan.

Jun 23 2020 View more View Less

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