Can someone help me with this world problem? (Maximizing revenue)
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Can someone help me with this world problem? (Maximizing revenue)

[From: ] [author: ] [Date: 11-11-10] [Hit: ]
the airline would lose 100 passengers. What should the airline charge to maximize their revenue?Thanks in advance.-I think theres a formula to solve this, but I could not remember it. However,......
On a certain route, an airline carries 5,000 every month. Each passenger pays $400 for a ticket. Research predicted that every time the ticket went up $10 in price, the airline would lose 100 passengers. What should the airline charge to maximize their revenue?

Thanks in advance.

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I think there's a formula to solve this, but I could not remember it. However, the brute force approach could be applied, since there's not too many iterations.

at $400, 5,000 passengers would be our base line.

Thus,

$400 x 5000 = $2,000,000
$410 x 4900 = $2,009,000
$420 x 4800 = $2,010,600
$430 x 4700 = $2,021,000
$440 x 4600 = $2,024,000
$450 x 4500 = $2,025,000 ------------> this is when the revenue is maximum
$460 x 4400 = $2,024,000
$460 x 4300 = $2,021,000
...

Thus, the ticket price would be $450

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$450
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