A large airline calculates that the additional cost of a having a passenger on a flight to the Bahamas as the cost of a bag of peanuts and a soft drink, which totals $1.50, but the airline's price is $600 for potential customers who want to buy vacant seats on the day of the flight. Which economic principle is this airline failing to utilize?
The airline is failing to think at the margin. If the cost of having another passenger on the flight is only $1.50, then the airline could charge a price well below $600 in order to encourage people to buy vacant seats, and for each seat sold, the airline would make additional profits.
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