Boeing 747s Seat 400 Passengers and Are Priced at $200

question 6

Multiple Choice

Boeing 747s seat 400 passengers and are priced at $200 million each, Boeing 777s seat 300 passengers and are priced at $160 million, and European Airbus A321s seat 200 passengers and are priced at $60 million. You are the purchasing manager of an airline company and have a $8,640 million budget to purchase new aircraft to seat a total of 20,800 passengers. Your company has a policy of supporting U.S. industries, and you have been required to spend twice as much on U.S.- manufactured aircraft as on foreign aircraft. Given the selection of three aircraft, how many of each should you order ?

• A)Number of Boeing 747s: 18 Number of Boeing 777s: 14
• Number of European Airbus A321s: 45
• B) Number of Boeing 747s: 18
• Number of Boeing 777s: 16
• Number of European Airbus A321s: 45
• C) Number of Boeing 747s: 48
• Number of Boeing 777s: 16
• Number of European Airbus A321s: 16
• D) Number of Boeing 747s: 16
• Number of Boeing 777s: 16
• Number of European Airbus A321s: 48
• E) Number of Boeing 747s: 16
• Number of Boeing 777s: 16
• Number of European Airbus A321s: 45

Identify the causes and consequences of double marginalization.

Recognize the mechanisms to address misaligned incentives between manufacturers and retailers.

Explain the reasons manufacturers bundle products and services.

Understand the strategies manufacturers use to enforce price discrimination.