Question

If the company can charge only one price, what should it be? $ Part 2 (5 points)See Hint Suppose instead of charging one price for adults and one price for children, the helicopter company decides to charge different prices for young children (ages 12 and under), teenagers, adults, and senior citizens (those people 65 and older).

Answer 1

Answer:

The best price is $50 per person which results in maximum profit.

Explanation:

Helicopter company has capacity for 8 people in one trip including the pilot and it costs them $5 per person therefore the price cannot be lower than $35 (7 * $5). The marginal cost per trip is $35 therefore the company cannot charge the price below this. If the company chooses to charge one price for all, it should charge $50 per person as this will result in maximum profit.