Airline Demand Team Exercise
Essay by Gapkxm • March 30, 2016 • Coursework • 379 Words (2 Pages) • 1,425 Views
IN-CLASS TEAM EXERCISE:
Koala Airlines plans a non-stop service from Atlanta to Seattle. A survey determines that
Pass = the number of passengers per month
is a linear function, where
Price = ticket price (in dollars) charged per round-trip flight
The survey finds that 6,000 passengers/month will fly at $500, but only 4,000 will if price is $600.
Answer the following in the space provided: (Show work for questions #4 and #5)
1. Show that -20 is the slope of the line for the function Pass = b + m Price
Slope = ΔPass / ΔPrice = (6,000 – 4,000)/(500 – 600) = (+2,000)/(-100) = -20
2. How many fewer passengers will fly each time that price is raised by $10?
ΔPass = Slope ΔPrice = (-20)(+10) = -200 or 200 fewer passengers
3. Find the equation for this function in slope-intercept form.
Pass = b + m Price
6,000 = b + -(-20)(500)
b = 6,000 + 10,000 = 16,000
Pass = 16,000 - 20 Price is the equation
4. Using the equation found in question 3, how many passengers will fly monthly if price is $400?
Pass = 16,000 - 20 (400) = 8,000
5. Koala can only carry 10,000 passengers/month even if all flights are full. Find the Price that sells all the seats without overbooking its flights.
10,000 = 16,000 - 20 Price
Price = (16,000 - 10,000)/20 = 300 or $300 will sell out the seats without overbooking
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