An airline mainly serves 2 groups of consumers, and their demand functions are as follows: where...

 

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An airline mainly serves 2 groups of consumers, and their demand functions are as follows: where P = Q1 Q2 Q = = Group 1: Q1 = 20,000 - 5P Group 2: Q2 = 16,000 - 5P price of air ticket number of tickets sold to the Group 1 consumers number of tickets sold to the Group 2 consumers total number of air tickets The average variable cost per ticket is constant at $1,000. a. If the airline can differentiate the two groups of consumers, how should it set the prices accordingly? Show your workings. (8 marks) If these b. Calculate the demand elasticities of these two groups of consumers. two groups of consumers are business travelers and tourists, which group is more likely the business travelers? Explain your answers. (5 marks) c. Suggest TWO ways to identify and charge different prices for business travelers and tourists. Briefly Explain. (4 marks) An airline mainly serves 2 groups of consumers, and their demand functions are as follows: where P = Q1 Q2 Q = = Group 1: Q1 = 20,000 - 5P Group 2: Q2 = 16,000 - 5P price of air ticket number of tickets sold to the Group 1 consumers number of tickets sold to the Group 2 consumers total number of air tickets The average variable cost per ticket is constant at $1,000. a. If the airline can differentiate the two groups of consumers, how should it set the prices accordingly? Show your workings. (8 marks) If these b. Calculate the demand elasticities of these two groups of consumers. two groups of consumers are business travelers and tourists, which group is more likely the business travelers? Explain your answers. (5 marks) c. Suggest TWO ways to identify and charge different prices for business travelers and tourists. Briefly Explain. (4 marks)