Scenario 15-5 An Airline Knows That There Are Two Types of Travelers

question 253

Multiple Choice

Scenario 15-5
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 15-5. How much profit will the airline earn if it sets the price of each ticket at $300?

• A)-$15,000
• B)-$5,000
• C)$25,000
• D)$45,000

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Definitions:

Remittances

Money sent by migrants back to their home countries, often to support family members financially.

GDP

Gross Domestic Product, the total market value of all final goods and services produced within a country in a specific time period.

Elasticity

In economics, elasticity measures how much the quantity demanded or supplied changes in response to a change in price or other factors.

Wage Income

Earnings received by an individual from employment or labor.