Answer to Question #134713 in Microeconomics for leny sumadia

Question

Cebu Pakpak is a national airline providing shuttle between different destinations in the country
and abroad. An analysis of the monthly demand for service has revealed the following demand
relation

Q = 26000 – 500P – 250P OG + 200I B – 5000S

Where Q is quantity measured by the number of passengers per month, P is price (P), P OG is a
regional price index for other consumer goods, I B is an index of business activity, and S, a binary
or dummy variable, equals 1 in summer months and 0 otherwise.
a. Determine the demand curve facing the airline during the month of December if P OG = 4 and
I B = 250.
b. Determine the demand curve facing the airline, quantity demanded, and total revenues
during the summer month of April if P=P100 and all other price-related and business activity
variables are as specified previously.

Answer 1

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