Question

A travel website sells tickets to a city for two airlines. Among those buying tickets, 20% fly airline A, and 80% fly airline B. If the price of a ticket is $600 for airline A and $360 for airline B, what is the expected revenue of an airline ticket sold by this travel website? (Note: Airline A has much more desirable departure times than Airline B, so it charges more.)

Answer 1

Answer:

The expected revenue of an airline ticket sold by this travel website is $408

Step-by-step explanation:

For the revenues per ticket we have;

airline A; 600

airline B; 360

For the probability of choosing the airlines we have;

airline A; 20% = 0.2

airline B; 80% = 0.8

Therefore, the expected revenue of an airline ticket sold by this travel website is;

600(0.2) + 360(0.8) = 408

Therefore, the expected revenue of an airline ticket sold by this travel website is $408