Explain why an airline may decide to sell an air ticket to a stand-by passenger at less than the full fare if there are empty seats on the airplane?
What will be an ideal response?
The decision depends on the marginal, or extra, cost of selling that person a ticket. Marginal cost will include such things as the cost of writing and processing the ticket, the food and beverages the person will consume, and the extra fuel that will be needed. If those costs are less than the cost of a full-fare ticket, then it will be profitable for the airline to charge the stand-by passenger a price that is greater than or equal to the sum of the marginal costs.
You might also like to view...
The marginal product of labor indicates ________. Therefore the MPL curve is also ________
A) the quantity of labor supplied for a given wage; the equilibrium price of labor B) the quantity of labor demanded for a given wage; the equilibrium price of labor C) the quantity of labor demanded for a given wage; the demand curve of labor D) the quantity of labor supplied for a given wage; the supply curve of labor E) none of the above
Government antitrust laws were designed to
a. encourage the production of public goods b. prevent natural monopolies c. prevent collusion among firms d. regulate natural monopolies e. correct the outcomes of positive and negative externalities in private markets
If expected inflation falls but actual inflation remains the same, what happens to the unemployment rate? Defend your answer
A change in the value of consumer’s stock market holdings will cause a shift in the consumption function.
Answer the following statement true (T) or false (F)