# Question

Air California, Inc. is a regional airline providing service between Los Angeles, California and Las Vegas, Nevada. An analysis of the monthly demand for service has revealed the following demand relation:

Q = 45,000 - 250P - 300PC + 250BAI + 10,000S

Where Q is quantity measured by the number of passengers per month, P is the price ($), PC is a price index for connecting flights (1982 = 100.), BAI is a business activity index (1982 = 100) and S, a binary or dummy variable, equals 1 in summer months, zero otherwise.

A. Determine the demand curve facing the airline during the winter month of January if P = $100, PC = 150, BAI = 200, and S = 0.

B. Calculate the quantity demanded and total revenues during the summer month of July if all price-related variables are as specified above.

Q = 45,000 - 250P - 300PC + 250BAI + 10,000S

Where Q is quantity measured by the number of passengers per month, P is the price ($), PC is a price index for connecting flights (1982 = 100.), BAI is a business activity index (1982 = 100) and S, a binary or dummy variable, equals 1 in summer months, zero otherwise.

A. Determine the demand curve facing the airline during the winter month of January if P = $100, PC = 150, BAI = 200, and S = 0.

B. Calculate the quantity demanded and total revenues during the summer month of July if all price-related variables are as specified above.

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