If Qualls Quality Airline Cuts Its Domestic Fares by 30

question 42

Multiple Choice

If Qualls Quality Airline cuts its domestic fares by 30%

• A) its fixed costs will decrease.
• B) profit will increase by 30%.
• C) a profit can only be earned by decreasing the number of flights.
• D) a profit can be earned either by increasing the number of passengers or by decreasing variable costs.

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Definitions:

Economic Profit

The difference between a firm's total revenue and its opportunity costs, including both explicit and implicit costs.

Cartel

An agreement among competing firms to control prices or production in a market, often to maximize profits by minimizing competition.

Dominant Strategy

In game theory, a strategy that is best for a player regardless of what strategies other players choose.

Economic Profit

Economic Profit is the difference between a firm's total revenue and its total costs, including both explicit and implicit costs, serving as a measure of a firm's financial performance beyond basic accounting profit.