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A travel website sells tickets to a city for two airlines. Among those buying tickets, 20% fly airline A, and 80% fly airline B. If the price of a ticket is $600 for airline A and $360 for airline B, what is the expected revenue of an airline ticket sold by this travel website? (Note: Airline A has much more desirable departure times than Airline B, so it charges more.)



$360




$408




$500




$600

Verified Answer :

the answer is the second one because you 0.80 x 600=480 and 0.20 x 360=72 and then subtaract the 2 answers from each other and it will become 408

Answer:

The expected revenue of an airline ticket sold by the travel website is:

                         $ 408

Step-by-step explanation:

It is given that:

20% fly airline A.

and and 80% fly airline B.

Also,  If the price of a ticket is $600 for airline A and $360 for airline B.

The expected value is calculated by:

\(E(X)=p(A)\times P(A)+p(B)\times P(B)\)

where p denote the probability of an event.

and P denotes the price of the ticket.

Clearly from the data we have:

\(p(A)=20\%=0.20\\\\p(B)=80\%=0.80\\\\P(A)=\$\ 600\\\\P(B)=\$\ 360\)

Hence, we calculate expected revenue as follows:

\(E(X)=0.20\times 600+0.80\times 360\\\\\\E(X)=\$\ 408\)

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