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weqwewe [10]
4 years ago
5

Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for va

cations have an elastic demand. If the airline's objective is to increase total revenue, it should A. decrease the price charged to vacationers and increase the price charged to business travelers. B. decrease the price to both groups of customers. C. increase the price charged to vacationers and decrease the price charged to business travelers. D. increase the price for both groups of customers.
Business
1 answer:
Ray Of Light [21]4 years ago
7 0

Answer: If the airline's objective is to increase total revenue, it should <u><em>decrease the price charged to vacationers and increase the price charged to business travelers.</em></u>

<u><em /></u>

Explanation:

Here the objective of the airline is to increase total revenue,  therefore airline should practice price discrimination i.e. charge different prices to vacation travelers and business travelers.

Since customers traveling for vacations have elastic demand i.e. ε > 1 , so if airline reduces the price of air ticket for them, then there will be a percentage decrease in the price that will be less then the percentage increase in the number of vacation travelers.

Therefore, total revenue will increase with decreasing price charged to vacationers.

Whereas;

The demand of business travelers is inelastic  i.e. ε < 1, so if airline increases the price of air ticket for business travelers, then there will be a percentage increase in the price that will be more then the percentage decrease in the number of vacation travelers

Therefore, total revenue will increase with increasing price charged to business travelers.

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3 years ago
Which of the following are necessary conditions for successful price discrimination?
mixer [17]

Answer:

d. at least two different markets with different price elasticities of demand

Explanation:

The theory of microeconomics about price differentiation is based on the concept of elasticity of demand. Price elasticity of demand is a measure of the sensitivity of demand for a good or service to changes in the price of that product. We say that the price elasticity of demand is elastic when a percentage change in the price of this good has major impacts on demand. On the contrary, we say that the price elasticity of demand is inelastic when variations in the price of goods have little or no influence on demand.

For price discrimination to take place, the offeror must be able to sell the same product at different prices to at least two different groups. This will depend on the price elasticity of consumer demand for the good in each of the markets. Thus, if one group is less elastic than the other, the offeror will be able to sell the goods at different prices.

An example: air market. Consumers are often more price sensitive when traveling for tourism than for business. Thus, a higher price may be charged to executives. which has lower price elasticity of demand than tourists.

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Answer:

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conjecture for next number: -80

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The report that is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance  is called : Adjusted trial balance

<h3>What is an adjusted trial balance?</h3>

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An adjusted trial balance include:

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