> As a result of this demand, the airline may choose to increase the price of flights for Australians (who are more likely to pay them as they are headed to summer!) and keep the price the same for Americans who would not be willing to pay the higher charges.
But why keep the price the same for Americans? Wouldn’t it be more profitable to increase the price overall?
Thats the fundamental question of pricing - x people will buy at $y and your margin will be $z, but i people will buy at $j and your margin will be $k. Now decide what x, y, i and j are, then find whether z>k.
But why keep the price the same for Americans? Wouldn’t it be more profitable to increase the price overall?