(Table: Maximum Willingness to Pay IV) Suppose That the Marginal

question 118

Multiple Choice

(Table: Maximum Willingness to Pay IV) Suppose that the marginal cost of a one-way airfare is $30. Assuming the firm has to charge everyone the same price, the profit-maximizing number of tickets is ____.

• A) 6
• B) 4
• C) 2
• D) 0

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent or salaries.

Variable Cost

A cost that changes with the level of output or production, such as materials and labor costs.

EBIT

Earnings Before Interest and Taxes; a measure of a company's profitability that excludes interest and income tax expenses.

EPS

Earnings Per Share - a company's profit divided by its number of outstanding shares, indicating the profitability on a per-share basis.