A Major Airline Keeps Track of Data on How Their

question 17

Essay

A major airline keeps track of data on how their passengers redeem frequent flyer
miles. They found that in the last year 58% of passengers redeemed them to purchase
tickets for domestic travel, 44% redeemed them to purchase tickets for international
travel, and that 16% redeemed them to purchase tickets for both domestic and
international travel.
a. What is the probability that in the last year a passenger redeemed frequent flyer miles
to purchase a ticket for domestic or international travel?
b. What is the probability that in the last year a passenger did not redeem frequent flyer
miles to purchase a ticket for domestic or international travel?
c. Is redeeming frequent flyer miles to purchase a ticket for domestic and international
travel mutually exclusive? Explain) general addition rule

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Definitions:

Barriers to Entry

Obstacles that make it difficult for new firms to enter a market, such as high startup costs or stringent regulations.

X-inefficiency

The production of output, whatever its level, at a higher average (and total) cost than is necessary for producing that level of output.

Price-Discriminated

A pricing strategy where a seller charges different prices for the same product or service to different buyers, based on factors like demand, market conditions, or buyer characteristics.

Pure Monopolist

A market scenario where a single firm is the sole provider of a product or service, facing no competition.