Tour companies and cruise lines often offer last minute fares that are far below the prices paid by customers who have booked their trips far in advance. Use marginal analysis to explain this pricing tactic
The answer rests on the marginal cost and the marginal revenue of the pricing tactic. If a cruise ship still has vacant cabins within a few days of its departure, it is unlikely that they will be sold at the regular price. If the cruise line can sell those cabins, even at a steep discount, they will get some marginal revenue; as long as the marginal revenue exceeds the marginal cost of having the extra passengers on the ship, the firm's profits are increased. Since most of the costs of running a cruise ship are fixed costs, i.e., they do not change with the number of passengers on board, then it is likely that this strategy will increase the cruise line's profits.
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A) about 6 months B) about 1 year C) about 18 months D) almost 2.5 years
Games:
A. may have noncooperative equilibriums that are positive-positive outcomes. B. must have a dominant strategy present in order to reach an equilibrium. C. only have one possible stable outcome. D. None of these statements is true.
In monopolistic competition, firms can have some market power
A. by producing differentiated products. B. because of barriers to entry into the industry. C. because of barriers to exit from the industry. D. by virtue of size alone.
Horizontal equity is achieved when taxes are collected from those who benefit from the government expenditure of the tax revenue
Indicate whether the statement is true or false