American Airline has a daily nonstop service from New Yorkto

American Airline has a daily non-stop service from New York.to London.

Flight AA 111 has 480 seats. The company estimates demand for this flight as follows: Demand = 900 – 0.5 x (price).

Please show work when solving.

^{1)What is the optimal price to maximize the revenue?}

^{2)What is the optimal revenue?}

Solution

1) Y = 900- 0.5x

Y\' = -0.5x

0 = -0.5x

x=0

optimal price to max. the revenues is 0

2) Y = 900