The Pioneer Theatre, also in NYC, declares a fare war by slashing its high fare

Question

The Pioneer Theatre, also in NYC, declares a fare war by slashing its high fare ticket prices. In response, the Broadway Theatre wants to reduce its high fare from the original $100. The low fare tickets continue to be priced at $75. (The new ticket price for the high fare will still be above the low fare.) Assume that the demand for high fare tickets is the same, i.e., normally distributed with a mean of 1200 and a standard deviation of 150. At the new prices, the optimal protection level for the high fares will

A. Increase

B. Decrease

C. Remain the same

D. Increase or Decrease, depending on the actual high fare ticket price.

If the Broadway theatre decided to overbook “X” number of tickets, how would the protection level and booking limits change?

A. No Change. Protection Level and Booking Limits would remain the same.

B. Protection Level would increase, Booking Limit would remain the same.

C. Protection Level would decrease, Booking Limit would increase.

D. Booking Limit would increase, Protection Level would remain the same.

E. Booking Limit would decrease, Protection Level would increase.

Explanation / Answer

the optimal protection level for the high fares wilL

C) Remain same

Because the data follow normal distributed that's why it is remains same.

If the Broadway theatre decided to overbook “X” number of tickets, how would the protection level and booking limits change?

D. Booking Limit would increase, Protection Level would remain the same.

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