Task:
Suppose an airline flying on the New York - Chicago route has estimated the demand curves for three different types of customers: business (no advance purchase), leisure (7 day advance purchase), and discount (14 day advance purchase) travelers.
They are:
Business: P = 600-Q and MR = 600-2Q;
Leisure: P = 500-2Q and MR = 500-4Q; and
Discount: P = 400-3Q and MR = 400-6Q
Assume there is only one class of service, hence the marginal cost of providing the service is equal for all customers and is $200. What prices will the airline charge to each of the three different segments of customers?