Ryanair sells two types of airfares, Standard and Flexi plus. There are 6000 consumers: 5000 consumers are family travelers who have higher valuations of a flight: their valuation of a Flexi plus fare is €200, and of Standard fare is €180. The other 1000 are lower valuation millennials: they value a Flexi plus fare for €160 and a Standard fare for €150. Note that Flexi plus is considered better by both groups of consumers – each group is willing to pay more for it than for Standard fare. Ryanair cannot directly set different prices for the same fare for different consumers but can set a separate price for each fare. 

Find the maximal revenue of the airline. Note, if a consumer is indifferent between buying and not, you can assume that the consumer buys.

Answer rating: 100% (QA)

Answer formula Maximal Revenue R pq 1 Standard airfares 6000200 1200000 2 Flexi plus ... View the full answer