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

Explain the concept of standardized products in contrast to differentiated products in market structures.

Understand the entry and exit conditions in a perfectly competitive market.

Comprehend the relationship between marginal revenue, marginal cost, and profit maximization in perfect competition.

Acknowledge the absence of advertising rivalry and brand differentiation in perfectly competitive markets.

---

Definitions:

Initial Value Method

An accounting practice in which an investment is recorded at its purchase cost without adjusting for market variations.

Excess Fair Value

The amount by which the fair value of an asset exceeds its carrying value on the books.

Amortized

Pertains to gradually reducing the cost of an intangible asset through scheduled, predetermined payments over its useful life.

Book Value

The net value of a company's assets minus its liabilities and intangible assets, representing the total value that shareholders would theoretically receive if a company was liquidated.