CAT 2007 Question 47

Instructions

DIRECTIONS for the following four questions:

A low-cost airline company connects ten India cities, A to J. The table below gives the distance between a pair of airports and the corresponding price charged by the company. Travel is permitted only from a departure airport to an arrival airport. The customers do not travel by a route where they have to stop at more than two intermediate airports.

Question 47

The company plans to introduce a direct flight between A and J. The market research results indicate that all its existing passengers travelling between A and J will use this direct flight if it is priced 5% below the minimum price that they pay at present. What should the company charge approximately, in rupees, for this direct flight?

Solution

From the table we can see that, the lowest price would be from A to H and H to J.

The cost of travel from A to H = Rs 1850

The cost of travel from H to J = Rs 425

Total cost = 1850 + 425 = Rs 2275

Lowest price = Rs 2275

95% of 2275 = Rs 2161


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