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 $600?
A)-$5,000
B)$15,000
C)$40,000
D)$60,000

Question

Quizplus · Accepted Answer

The airline will earn $600 from each of the 100 business travelers, for a total of $60,000. The airline will also earn $600 from each of the 50 vacationers, for a total of $30,000. The total revenue from the flight will be $60,000 + $30,000 = $90,000. The cost of the flight is $20,000, so the profit will be $90,000 - $20,000 = $40,000.

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