Question

The full fare is $100, the discounted fare is $70. In the next period (the last one before departure) there will be a request for the discounted fare with probability 0.5, and a full fare request with probability 0.4; probability of no request is 0.1. (a) What would the probability of discount request have to be in the next period in order to accept the discount request? Do you need to assume anything about probability of no request? (b) Assume none of the original probabilities can change. How much should the discount price increase in order to accept it in the first period? (c) Can you ever find probabilities for the example that will make you reject the full fare? (d) Find examples of class request probabilities so that the expected value of the seat in the next period is $101, $100, $85, $77, $45.

Answer 1

Step-by-step explanation:

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