Question

Please give a short explanation of each

A. The (point) price elasticity of a linear price-response function increases with price.

True                                                    False

B. To implement revenue management, capacity must be a fixed number.

True                                                    False

C. For durable/expensive goods, normally the short term price elasticity is lower than the long term price elasticity.

True                                                    False

D. Comparing to theoretical optimal solution, EMSR-a heuristic underestimates protection levels for high fare classes, and resulting in lower booking limits for lower fare classes.

True                                                    False

E. In e-Commerce era, prices of durable/expensive goods (car, house, etc.) in general converge to similar and lower prices.

True                                                    False

F. Pure group based pricing is more prevalent in service industry because service cannot be stored for trade or exchange

           

            True                                                    False

G. When calculating the booking limits of different fare classes, the demand distributions of the lowest price fare class is never used.

           

            True                                                    False

H. In the nested seat allocation system, if the booking limit of a low price fare class is positive, the booking limit for any higher price fare class must also be positive.

True                                                    False

Answer 1

A. False, in linear price-response function, elasticity is fixed at all times.

B. False, capacity can be a range too, within permissible limit.

C. False, short term elasticity is higher.

D. False, it over estimates for high class.

E. True, due to widespread information and competition.

F. True, less prevalent in manufacturing type.

G. True, because it is highly biased.

H. False, if one is positive other must be negative.