Question

MTBd=310-2QBd Mata=230 – 2Qtd Consider QBd=100, Q12=80. True or false? Midsouth should sell more tickets to business travelers while fewer to tourists travelers to increase total profit. Explain by comparing Mība and Matta

Answer 1

Given that,

Profit functions are as follows:

$M\pi _{Bd}=310-2Q_{Bd}$

$M\pi _{Td}=230-2Q_{Td}$

Here, we consider

At this point,

$M\pi _{Bd}=310-2(100)$

= 310 - 200

= 110

$M\pi _{Td}=230-2(80)$

= 230 - 160

= 70

So, the total profit at this point:

= 110 + 70

= 180

Now, suppose that Midsouth sell 20 more tickets to business travelers while 20 less tickets to tourist travelers.

Therefore,

At this point,

$M\pi _{Bd}=310-2(120)$

= 310 - 240

= 70

$M\pi _{Td}=230-2(60)$

= 230 - 120

= 110

So, the total profit at this point:

= 70 + 110

= 180

Now, again suppose that Midsouth sell 40 more tickets to business travelers while 40 less tickets to tourist travelers.

Therefore,

At this point,

$M\pi _{Bd}=310-2(140)$

= 310 - 280

= 30

$M\pi _{Td}=230-2(40)$

= 230 - 80

= 150

So, the total profit at this point:

= 30 + 150

= 180

Hence, by comparing the profit function,

we conclude that the total profit remains the same if the midsouth sell more tickets to the business travelers and fewer to the tourist travelers.

Therefore, the statement is False.