Two Airlines Offer Conveniently Scheduled Flights to the Airport Nearest

question 52

Short Answer

Two airlines offer conveniently scheduled flights to the airport nearest your corporate headquarters.Historically,flights have been scheduled as reflected in this transition matrix. $$\begin{array} { c | c c } \text { Current } & { \text { Next Flight } } \\\text { Flight } & \text { Airline A } & \text { Airline B } \\\hline \text { Airline A } & .6 & .4 \\\text { Airline B } & .2 & .8\end{array}$$
a.If your last flight was on B, what is the probability your next flight will be on A?
b.If your last flight was on B, what is the probability your second next flight will be on A?
c.What are the steady state probabilities?

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Definitions:

Mixed Cost

A cost composed of a fixed component and a variable component that changes with the level of activity or production.

High-low Method

An approach used in cost accounting to determine the variable and fixed components of a cost by analyzing the highest and lowest levels of activity.

Utility Cost

The expense incurred for using utilities such as electricity, water, and natural gas in a business operation.

Total Cost

The sum of all costs associated with the production and delivery of a company's products or services, including both fixed and variable costs.