Your bus company (the SuperMegaBusUltra) offers two classes of service - Comfort Class and Awesome Class...

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Your bus company (the "SuperMegaBusUltra") offers two classes of service - Comfort Class and Awesome Class between NYC and DC. The cost to provide Comfort class is $10 a seat. The cost to provide Awesome Class is $15 a seat. There are two types of customers: Average Consumers and Luxury Consumers. There are 50 Luxury Consumers and 100 Average Consumers. Average Consumers are will to pay $35 for Comfort class and $40 for Awesome class. Luxury Consumers are will to pay $45 for Comfort class and $100 for Awesome class. (a) What price will you charge for each class of seat that will maximize your profits? You come up with an idea. Let's remove the Comfort class and replace it with a new less expensive and nice product "Cheapo Class" These seats cost $5 to provide. Average Consumers are will to pay $25 for Cheapo class and $40 for Awesome class. Luxury Consumers are will to pay $30 for Cheapo class and $100 for Awesome class. (b) If you did remove Comfort class and replace with Cheapo class, what would be the change in profits? (Please give the actual quantity increase or decrease in revenue in your answer.) Your bus company (the "SuperMegaBusUltra") offers two classes of service - Comfort Class and Awesome Class between NYC and DC. The cost to provide Comfort class is $10 a seat. The cost to provide Awesome Class is $15 a seat. There are two types of customers: Average Consumers and Luxury Consumers. There are 50 Luxury Consumers and 100 Average Consumers. Average Consumers are will to pay $35 for Comfort class and $40 for Awesome class. Luxury Consumers are will to pay $45 for Comfort class and $100 for Awesome class. (a) What price will you charge for each class of seat that will maximize your profits? You come up with an idea. Let's remove the Comfort class and replace it with a new less expensive and nice product "Cheapo Class" These seats cost $5 to provide. Average Consumers are will to pay $25 for Cheapo class and $40 for Awesome class. Luxury Consumers are will to pay $30 for Cheapo class and $100 for Awesome class. (b) If you did remove Comfort class and replace with Cheapo class, what would be the change in profits? (Please give the actual quantity increase or decrease in revenue in your answer.)

Answer rating: 100% (QA)

a To maximize profits we need to determine the price point at which the demand for each class of service maximizes revenue For Comfort Class Average C... View the full answer