DASH Airlines Is Considering the Addition of a Flight from Red

question 88

Multiple Choice

DASH Airlines is considering the addition of a flight from Red Cloud to David City. The total cost of the flight would be $1,100, of which $800 are fixed costs already incurred. Expected revenues from the flight are $600. DASH should

• A) not add this flight, because only flights that cover their full costs are profitable.
• B) not add this flight, because it is not profitable at the margin.
• C) add this flight, because marginal revenue exceeds marginal costs and total revenue exceeds total variable cost.
• D) not add this flight, because total costs exceed total revenue.

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Definitions:

Telegraph Wire

A medium used historically for transmitting telegraphic messages through electrical signals over long distances.

Miles

A unit of length equal to 5,280 feet or approximately 1,609 meters, used primarily in the United States and the United Kingdom.

New York City

A major metropolitan city located in the state of New York, known for its significant cultural, financial, and media influence both nationally and internationally.