DASH Airlines Is Considering the Addition of a Flight from Red

question 88

Multiple Choice

DASH Airlines is considering the addition of a flight from Red Cloud to David City. The total cost of the flight would be $1,100, of which $800 are fixed costs already incurred. Expected revenues from the flight are $600. DASH should

• A) not add this flight, because only flights that cover their full costs are profitable.
• B) not add this flight, because it is not profitable at the margin.
• C) add this flight, because marginal revenue exceeds marginal costs and total revenue exceeds total variable cost.
• D) not add this flight, because total costs exceed total revenue.

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