Question 9 1 pts An airline can sell tickets from Sydney to Melbourne to two typ

Question

Question 9 1 pts An airline can sell tickets from Sydney to Melbourne to two types of customers: business and leisure travelers. Each customer will purchase one ticket only. Assume that the cost of providing either good (flight in economy or business) and the tickets are zero. The valuation or willingness to pay ($ per ticket) each type of buyer place on both types of tickets is presented below: Leisure 80 80 Business 120 300 Ticket Economy Business Which of the following pricing schemes yields the highest profits if the firm cannot identify the type of buyer who is making the purchase? Assume that if the customer is indifferent between buying a ticket or not, he buys it. Note, Pe is the price of the economy ticket and PB the price of the business ticket. PE-80; PB-80 PE-80; Pe-300 PE-300; PB-300. PE-80; PB-259. PE-80: PB-261.

Explanation / Answer

Given that if a consumer is indifferent between buying and ticket or not, he buys it. A leisure customer would prefer buying business ticket as the price for him is same regardless of ticket type he buys I.e. 80. A business consumer is willing to pay 300 for business ticket and 120 for economy and going by the nature he/she is more likely to buy business ticket, if available.

Therefore, best price strategy would be PE = 80, PB = 300

OPTION C

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