Question: In the second half of2002, several major U.S. airlines began running market tests to determine if they could cut walk-up or unrestricted business fares and

In the second half of2002, several major U.S. airlines began running market tests to determine if they could cut walk-up or unrestricted business fares and maintain or increase revenues. Continental Airlines offered an unrestricted fare between Cleveland and Los Angeles of $716, compared with its usual $2,000 fare, and found that it earned about the same revenue as it would have collected with the higher fare. Making similar changes on its routes from Cleveland to Houston, Continental found that the new fare structure yielded less revenue, but greater market share. On the Houston-Oakland route, the new fare structure resulted in higher revenue.
a. What did these test results imply about business traveler price elasticity of demand on the Cleveland-Los Angeles, Cleveland-Houston, and Houston-Oakland routes for Continental Airlines?
b. How did these results differ from the discussion of airline elasticity in this chapter?
c. What factors caused these differences?

Step by Step Solution

★★★★★

3.40 Rating (169 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

We can use the facts in the question to make inferences about the price elasticity of demand for wal... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

655-B-E-M-E (4814).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

In the second half of 2008, as the equilibrium price and quantity of oil both decreased, OPEC succeeded in reducing oil production by its members, but could not prevent the dramatic drop in price....

1. How were financial markets likely to respond to President Carters lecture? Explain. 2. At the time President Carter made his remarks, the inflation rate was running at about 10% annually and...

If a U.S.-based multinational company generates more than 80% of its profits (earnings) outside the U.S. in the euro zone and Japan, and both the euro and the yen fall significantly in value versus...

2. In the second half of 2002, several major U.S. airlines began running market tests to determine if they could cut walk-up or unrestricted business fares and maintain or increase revenues....

In the 2 nd half of 2 0 0 2 , several major U . S . airlines began running market test to determine if they could cut walk - up or unrestricted business fares and maintain or increase revenues....

HI GOOD AFTERNOON, IS IT POSSIBLE THAT I MAY GET SOME ASSISTANCE WITH THIS ASSIGNMENT. SEE ATTACHMENT INSTRUCTIONS ARE AS FOLLOWS: ONLY THE RELEVANT HISTORY IS IMPORTANT, IN TERMS OF A PROBLEM...

CASE 25 Southwest Airlines in 2014: Culture, Values, and Operating Practices Arthur A. Thompson John E. Gamble The University of Alabama Texas A&M University-Corpus Christi n 2014, Southwest Airlines...

what is their strategy formulation and stategy implementation ?? C-30 CASE 16 Southwest Airlines Andrew Inkpen You are now free to move about the country" In 2013, Southwest Airlines (Southwest), the...

Read the section on Results of Operations. Find 3 things that tell you something important regarding the profitability of the company this year as compared to last year. Use bullet points to list and...

In the production of a bean oil beans containing 13.0 wt% oil and 87.0% solids are ground and fed to a stirred tank (the extractor) along with a recycled stream of liquid n-hexane. The feed ratio is...

Two objects, objectA and objectB, are objects in the class Listing. The object objectA is copied to objectB. How many objects exist after the copy, if the copy is performed as: (a) a deep copy? (b) a...

Hiring a certified public accounting consultant would be especially useful for completing a . . . Question 1 options: emergency action plan facility audit risk management plan legal audit

4. After all these transactions, which is the amount of cash is: a. 12,850 lei b. 8500 lei c. 12,100 lei d. 10,100 lei

An internal study at Mimeo Corporationa manufacturer of low-end photocopiersrevealed that each of its workers assembles three photocopiers per hour and is paid $3 for each assembled copier. Although...

The Einstein Bagel Corp. offers a frequent buyer program whereby a consumer receives a stamp each time she purchases one dozen bagels for $5. After a consumer accrues 10 stamps, she receives one...

A common marketing tactic among many liquor stores is to offer their clientele quantity (or volume) discounts. For instance, the second-leading brand of wine exported from Chile sells in the United...

anwser At the bottom of all its February sales receipts, Selfert Stores Inc. printed \$2-off coupons. The coupons may be redeemed March 1-April 30. Seifert Stores Inc. accepts only cash, MasterCard,...

Sales revenue $30,000,000 General and administrative expenses 5,400,000 Deferred revenue 50,000 Interest expense 18,000 Selling expenses 800,000 Interest revenue 16,000 Cost of goods sold 9,000,000...

The following book and fair values were available for Westmont Company as of March 1 494,000 449, 500 763, 500 1,060, s00 Land Buildings Customer relationships Accounts payable Common stock...