Suppose that an airline offers two types of tickets to France: economy, with price PL and...

  

Transcribed Image Text:

Suppose that an airline offers two types of tickets to France: economy, with price PL and quality SL, and first class, with price PH and quality SH. It costs the airline 10s per flight to provide a seat of quality s. There are two types of consumer, high-type and low-type. The high-type consumer values quality according to V (s) = 30s - s for s 10 and VH (s) = 100s - s for s> 10, whereas the low-type consumer values it according to VL(s) = 50s - s. Q3. If the airline could distinguish and separate the two types, what ticket price and quality level would it choose for an economy seat? (a) (PL, SL) = (675, 15) (b) (PL, SL) (875, 25) = (c) (PL, SL) (725, 15) = (d) (PL, SL) = (800, 20) (e) (PL, SL) (600, 20) = Q4. If the airline could distinguish and separate the two types, what ticket price and quality level would it choose for a first class seat? (a) (PH, SH) = (2475, 45) (b) (pH,SH)= (3600, 60) (c) (PH, SH) = (3625, 40) (d) (pH, SH) = (2700, 60) (e) (PH, SH) = (3375,45) Q5. If the airline cannot distinguish and separate the two types, what ticket price and quality level would it choose for an economy seat? (a) (PL, SL) = (300, 10) (b) (PL, SL) (400, 10) = (c) (PL, SL) = (445, 15) (d) (PL, SL) = (500, 10) (e) (PL, SL) (325, 15) = Suppose that an airline offers two types of tickets to France: economy, with price PL and quality SL, and first class, with price PH and quality SH. It costs the airline 10s per flight to provide a seat of quality s. There are two types of consumer, high-type and low-type. The high-type consumer values quality according to V (s) = 30s - s for s 10 and VH (s) = 100s - s for s> 10, whereas the low-type consumer values it according to VL(s) = 50s - s. Q3. If the airline could distinguish and separate the two types, what ticket price and quality level would it choose for an economy seat? (a) (PL, SL) = (675, 15) (b) (PL, SL) (875, 25) = (c) (PL, SL) (725, 15) = (d) (PL, SL) = (800, 20) (e) (PL, SL) (600, 20) = Q4. If the airline could distinguish and separate the two types, what ticket price and quality level would it choose for a first class seat? (a) (PH, SH) = (2475, 45) (b) (pH,SH)= (3600, 60) (c) (PH, SH) = (3625, 40) (d) (pH, SH) = (2700, 60) (e) (PH, SH) = (3375,45) Q5. If the airline cannot distinguish and separate the two types, what ticket price and quality level would it choose for an economy seat? (a) (PL, SL) = (300, 10) (b) (PL, SL) (400, 10) = (c) (PL, SL) = (445, 15) (d) (PL, SL) = (500, 10) (e) (PL, SL) (325, 15) =

Answer rating: 100% (QA)

To determine the optimal ticket price and quality level for each scenario we need to compare the consumers valuation of the ticket with the cost to the airline Q3 If the airline can distinguish and se... View the full answer