Airlines Offer Lower Prices to Vacationers Than to Business Travelers

question 26

Multiple Choice

Airlines offer lower prices to vacationers than to business travelers because

• A) of government regulations requiring them to do so.
• B) business travelers do not care at all about costs.
• C) business travelers are less flexible in their travel plans than vacationers are.
• D) airlines know that business travelers enjoy flying more than vacationers do.

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Definitions:

Segment Margin

The amount of profit or loss generated by a particular segment of a business, after accounting for the direct costs and overheads attributable to that segment.

Avoidable Cost

Expenses that can be eliminated if a particular decision or action is not pursued.

Special Order

A special order is an order for goods or services that is outside the company's normal scope of operations or production schedule, often requiring special pricing or terms.

Minimum Selling Price

The lowest price at which a product can be sold to cover its production costs without making a loss.