An Airline Finds That Its Morning Flights Are Half-Empty, but the Mid-Afternoon

question 117

Multiple Choice

An airline finds that its morning flights are half-empty, but the mid-afternoon flights are full. Which would be the MOST plausible statement for an economist to make?

• A) Cut the prices of early morning flights and raise the prices of afternoon flights.
• B) Nothing can be done to rectify the situation because of consumer sovereignty.
• C) Fewer flights should be scheduled in the afternoon to force travelers to take morning flights.
• D) Nothing can be done because travelers are inflexible with their schedules.

Recognize the demographic trends affecting government budget deficits.

Identify the relationship between income levels, tax burdens, and equity in a tax system.

Explain the impact of taxes on economic efficiency and deadweight loss.

Understand the fiscal role of state and local governments versus the federal government.

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Definitions:

Financial Lease

A lease agreement in which the lessee assumes both the risks and rewards of asset ownership, often with an option to purchase the asset at the end of the lease term.

Operating Lease

A lease agreement that allows the use of an asset but does not convey rights of ownership of the asset.

Sale and Leaseback

A transaction where a company sells an asset and leases it back from the new owner, allowing the company to use the asset while freeing up capital.

Temporary Cash

Cash held for short-term purposes or to cover near-term obligations.