An airline charges the following baggage fees: $25 for the first bag and $35 for the...

An airline charges the following baggage fees: $25 for the first bag and $35 for the second. Suppose 54% of passengers have no checked luggage, 34% have one piece of checked luggage and 12% have two pieces. Suppose that a negligible portion of people check more than two bags.

a) Build a probability model, compute the average revenue per passenger, and compute the corresponding standard deviation.
b ) About how much revenue should the airline expect for a flight of 120 passengers? With what standard deviation? Note any assumptions made and whether they are justified.

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Expert Solution

orchestra answered 1 year ago

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