In Order to Maximize Its Profit in the Short Run,an

question 11

Multiple Choice

In order to maximize its profit in the short run,an airline should offer an additional flight whenever

• A)its marginal revenue exceeds its sunk costs
• B)it marginal revenue exceeds its average total cost
• C)the average seat price exceeds its sunk costs
• D)the average seat price exceeds its average total cost
• E)the additional revenue exceeds the additional costs

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Definitions:

Capital Investment

The spending of money to purchase assets or property intended to create growth or profit for a business.

Investment Funds

Pooled funds that collect capital from multiple investors to invest in securities, real estate, or other assets, according to a predetermined strategy.

Capital Rationing

The process by which management allocates funds among competing capital investment proposals.

Capital Investment

Funds invested in a business with the intent to further its objectives, such as acquiring new assets or launching new ventures.