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Profit Maximization Price Elasticity

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Delta Airlines has determined that the price elasticity of demand for two customer segments (Coach and Business Class) is -1.35 and -2.50. Based on their expectations of profitability, Delta realizes the price of a Coach seat should be $175 (one-way). How much should Delta charge for a Business Class ticket?

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Solution Summary

Profit maximization for price elasticity is examined. How much Delta should charge for business class tickets are determined.

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  • MBA, Merage School of Business, Univ of Cal, Irvine
  • BA, Univ of Cal, Irvine
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