Question

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

Answer 1

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 2

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

$ 408

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)* P(A)+p(B)* 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* 600+0.80* 360\\\\\\E(X)=\$\ 408`