A Train Company Is Considering Applying Yield Management Principles to Its

question 71

Essay

A train company is considering applying yield management principles to its ticket sales. Suppose that there is no variable cost in the operation, only a fixed cost to run each train. The company decides that a student ticket will sell for half the cost of a business ticket. If demand for the business tickets is given by 50 - 3x where x is the sales price of a business ticket and demand for student tickets is given by 70 - y² where y is the price of a student ticket how much should the company charge for tickets to maximize revenue?

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Definitions:

Interest Rate

The percentage charged on the total amount borrowed or paid on deposited funds over a specific time period.

Liquid Assets

Assets that can quickly and easily be converted into cash without significant loss in value.

Interest Rate

The percentage of a loan that is applied as interest for the borrower, usually expressed as an annual rate of the remaining loan balance.

Money Supplied

A rephrased definition: The total volume of money provided or injected into the economy by various sources, including but not limited to monetary authorities.