Charge to each of the three different segments of customers

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Reference no: EM13976388

Suppose an airline flying on the Charlotte - Chicago route has estimated the demand curves for three different types of customers: business (no advance purchase), leisure (7 day advance puchase), and discount (14 day advance purchase) travellers. They are: Business: P = 600 − Q and

MR = 600 − 2Q Leisure: P = 500 − 2Q and MR = 500 − 4Q; Discount:

P = 400 − 3Q and MR = 400 − 6Q. Assume there is only one class of service, hence the marginal cost of providing the service is equal for all customers and is $100. What prices will the airline charge to each of the three different segments of customers? (Hint: Set MR=MC for each class of travel).

Reference no: EM13976388

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