An airline is considering adding a flight from Chicago to Sioux Falls. Revenue from the flight is expected to be $3,000. The total cost of the flight is $5,500, and the variable cost is $2,000. Should the airline add this flight?
A. No, the revenue ($3,000) is below the cost ($5,500).
B. No, the addition to profit is very small and not worth the effort.
C. Yes, profit increases by $1,000 ($3,000 ? $2,000).
D. Yes, profit increases by $3,000.
Answer: C
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