Three Airlines Compete on the Route Between New York and Los

question 11

Essay

Three airlines compete on the route between New York and Los Angeles.Stanton Marketing has performed an analysis of first class business travelers to determine their airline choice.Stanton has modeled this choice as a Markov process and has determined the following transition probabilities.
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a. Show the random number assignments that can be used to simul ate the first class business traveler's nex airline is $A , B$ , and $C$ .
b. Assume the traveler used airline C last. Simul ate which airline the traveler will be using over her next 2 her flights are on each of the three airlines? Use the following random numbers, going from lett to right, to
$\begin{array} { l l l l l } 71 & 95 & 83 & 44 & 34 \\ 49 & 88 & 56 & 05 & 39 \\ 75 & 12 & 03 & 59 & 29 \\ 77 & 76 & 57 & 15 & 53 \\ 37 & 46 & 85 & 24 & 53 \end{array}$

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Definitions:

Demand for Money

The need or desire to hold money as opposed to investing or spending it, influenced by factors such as interest rates and economic stability.

Liquidity Preference

The desire of consumers and businesses to hold onto cash or easily convertible assets rather than making long-term investments or transactions.

Supply and Demand

The fundamental economic model for price determination in a market, describing the relationship between the quantity of a good that producers wish to sell at various prices and the quantity that consumers wish to buy.

Interest-Rate Effect

The interest-rate effect describes how changes in the central bank's interest rate influence the level of overall spending in the economy by affecting borrowing costs.