| Question | 5. Delta Airlines is working on pricing its flights between Detroit Metro Airport and Minneapolis-St. Paul Airport. Over years of flying the route, Delta knows that the weekly demand curve it faces for business class tickets on these flights can be estimated by P = 4250 ? 10Q, where Q is number of tickets and P is in dollars per ticket. Delta’s marginal cost for each passenger it flies is $250. Recently, a new startup has come to Delta with a proposal. The startup claims that, using big data collected from a variety of sources, it has devised a system that can identify and charge each passenger a price equal to the maximum amount the passenger would be willing to pay for their plane ticket on the Delta flight from Detroit to Minneapolis. What’s the most that Delta should be willing to pay this startup, per week, for this service? (Assuming there no changes in fixed costs from increasing or decreasing the number of tickets sold.) |
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| Subject | economy |
