Question

Attempts: Do No Harm: 6 2. Understanding the role of fixed cost in the short run Aa Aa Consider an airline's decision about whether or not to cancel a particular flight that hasn't sold out. The following table provides data on the total cost of operating a 100-seat plane for various numbers of passengers Number of Total Cost (TC) 35,000 55,000 65,000 67,000 68,000 68,500 69,000 70,000 70,500 70,800 70,900 Passengers 10 20 30 40 50 60 70 80 90 100 Given the information presented in the previous table, the total fixed cost to operate this flight is $35,000 At each ticket price, a different number of consumers will be willing to purchase tickets for this flight. Use the following demand schedule to complete the questions that follow: Price (Dollars per ticket) 800 600 450 150 Quantity Demanded (Tickets per flight) 0 20 80 100

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Answer 1

$35000

It is the cost incurred at 0 passenger level.So, it is a fixed cost.

Correct Answer:

$450 per ticket; 80 seats

At this level, price is greater than average variable cost.

Correct Answer:

B

C

Here, price is greater than the AVC, but profit is negative. So, operation will continue in the short run.

Correct Answer:

No

Profit will remain negative.

Correct Answer:

False