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Air Shangrila sells to both tourist and business travelers on its single route. Tourists always stay...

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Advance Math

Air Shangrila sells to both tourist and business travelers onits single route. Tourists always stay over on Saturday nights,while business travelers never do. The weekly demand function oftourists is

         QdT=8,000−5P,

and the weekly demand function of business travelers is

         QdB=2,000−0.5P.

The marginal cost of a ticket is $350.

Instructions: Round your answers to 2 decimalplaces as needed. For elasticities, include a negative sign ifnecessary.

a. What prices should Air Shangrila set for its tourist ticket andits business ticket?

    Ptourist = $.

    Pbusiness = $.

b. If the government passes a law that says all tickets must costthe same amount, what price will Air Shangrila set? (Assume AirShangrila sells to both types of consumers. That is, profit fromselling to both types of consumers will be greater than profitwithout price discrimination where price is set so high that onlyone group demands a positive quantity.)

    P = $.

c. What would be the elasticities of demand for the two groups atthat price?

    Edtourist =.

    Edbusiness =.

Answer & Explanation Solved by verified expert
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Air shangrila sell to both tourist and the business travels andthe demand equation    See Answer
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