If an Airline Company Has Several Empty Seats on a Flight

question 215

Multiple Choice

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100, then it will be profitable for the airline to

• A) charge a stand-by passenger no less than the full fare of $500.
• B) charge a stand-by passenger less than $100.
• C) charge a stand-by passenger more than $500.
• D) charge a stand-by passenger more than $100.
• E) fill the seats at the last minute for any price.

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Definitions:

Payoff

Refers to the potential return or outcome received from a particular strategy or decision in game theory and economics.

Nash Equilibrium

A concept within game theory where no player can benefit by changing strategies while the other players keep theirs unchanged, representing a state of mutual best responses.

Offense Strategy

A proactive approach in business or sports wherein actions are initiated to gain a competitive advantage or to score against an opponent.

Big Ten

Refers to a group of ten large universities in the Midwestern United States that are members of the Big Ten Conference, known for their athletic and academic achievements.