The Eastern Shuttle Inc., is a regional airline providing shuttle service betwee

Question

The Eastern Shuttle Inc., is a regional airline providing shuttle service between New York and Washington, DC. An analysis of the monthly demand for service has revealed the following demand relation:
Q = 26,000 – 500P – 250P og + 200 I b – 5,000S

Where Q is quantity measured by the number of passengers per month, P is price ($), P og is a regional price index for other consumer goods (1967 = 1.00, I b is an index of business activity, and S is a binary or dummy variable, equals 1 in summer months and 0 otherwise.

Question:
Determine the demand curve facing the airline during the winter month of January is P og = 4 and I b = 250.

Thanks much, Mike

Explanation / Answer

Q = 26000 - 500 P - 1000 + 50000 Q = 55,000 - 500P

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