Weekly passenger flights with a freight flight

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Reference no: EM1322882

Q. As the exclusive carrier on a local air route, a regional airline must conclude the number of flights it will provide every week also the fare it will charge. The estimated cost every flight is $2,000. It expects to fly full flights (100 passengers), so marginal cost (on a every passenger basis) is $20.. The airline's estimated demand curve is P = 120 - 0.1Q, where P is the fare in dollars also Q is the number of passengers every week

a. Illustrate what is the airline's profit maximizing fare? Elucidate how many passengers does it carry every week, using Elucidate how many flights? Illustrate what is its weekly profit?

b. Assume the airline is offered $4000 every week to haul freight along the route for a local industry. This will mean replacing one of the weekly passenger flights with a freight flight (at the same operating cost). Should the airline carry freight for the local industry? Explain

Reference no: EM1322882

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