A cruise ship company offers two packages to its clients: an “economy” package and a “deluxe” package with more amenities to its higher-paying customers. The company estimates that its customers have the following demand functions: Economy package: Q(E) = 20,000 - 10PE Deluxe package: Q(D) = 5900 - 1.5PD The costs for the two services (as a function of the number of passengers) are: Economy passenger: C(QE) = 5000 + 100QE + 0.1Q^2E Deluxe passenger: C(QD) = 5000 + 200QD + 6Q^2D What prices should the company set for the economy and deluxe packages? What are the number of passengers that the ship will have in each package, and how much profit does the company make per cruise? Now assume the ship has a maximum capacity of 4,000 people. How many spaces should be arranged for deluxe passengers and how many for economy? What prices should the company set for the two packages? What is the profit for the company now?

A cruise ship company offers two packages to its clients: an “economy” package and a “deluxe” package with more amenities to its higher-paying customers. The company estimates that its customers have the following demand functions: Economy package: Q(E) = 20,000 - 10PE Deluxe package: Q(D) = 5900 - 1.5PD The costs for the two services (as a function of the number of passengers) are: Economy passenger: C(QE) = 5000 + 100QE + 0.1Q^2E Deluxe passenger: C(QD) = 5000 + 200QD + 6Q^2D What prices should the company set for the economy and deluxe packages? What are the number of passengers that the ship will have in each package, and how much profit does the company make per cruise? Now assume the ship has a maximum capacity of 4,000 people. How many spaces should be arranged for deluxe passengers and how many for economy? What prices should the company set for the two packages? What is the profit for the company now?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 2E: The price elasticity of demand for air travel differs radically from first-class (1.3) to...

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