Which of the Following Statements Are Most Likely to Be

question 157

Multiple Choice

Which of the following statements are most likely to be true for the air transportation industry?
(i) in the short run, the cost of the airplane is sunk
(ii) the opportunity cost of a flight is the variable cost
(iii) as long as total revenue exceeds fixed cost, the airlines should continue operating

• A)(i) and (ii) only
• B)(ii) and (iii) only
• C)(i) and (iii) only
• D)(i), (ii) and (iii)

---

Definitions:

NPV

Net Present Value, a calculation that discounts all cash flows associated with a project or investment back to the present value to assess its profitability.

Operating Cash Flow

A measure of the cash generated by a company's normal business operations, reflecting its capacity to sustain and grow operations.

Financial Break-Even

The point at which total revenue exactly covers total costs, leaving no profit or loss.

Financial Basis

The underlying value or cost used for tax purposes, to calculate capital gain or loss upon the sale of an asset, including adjustments for improvements, depreciation, and costs of sale.