The Eastern Shuttle Inc., is a regional airline providing shuttle service betwee

Question

The Eastern Shuttle Inc., is a regional airline providing shuttle service between New York and Washington, DC. An analysis of the monthly demand for service has revealed the following demand relation:
Q = 26,000 – 500P – 250P og + 200 I b – 5,000S

Where Q is quantity measured by the number of passengers per month, P is price ($), P og is a regional price index for other consumer goods (1967 = 1.00, I b is an index of business activity, and S is a binary or dummy variable, equals 1 in summer months and 0 otherwise.

Question:
Determine the demand curve facing the airline, quantity demanded, and total revenues during the summer month of July if P =$100 and all other price-related and business activity variables are as specified previously.

Thanks for the help, Mike

Explanation / Answer

Q = 26,000 - 500P - 250Pog + 200lb - 5000S Q = 26,000 - 500P - 100(4) + 200(250) - 5000(1) Q = 26,000 - 500P - 400 + 50000 - 5000 Demand Curve Q = 80,600 - 500P Quantity Demanded Q($100) = 80,600 - 500(100) = 30,600 units Revenue Q*P = 30,600 * 100 = $3,060,000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.