Which of the Following Best Explains Why Airlines Often Cut

question 158

Multiple Choice

Which of the following best explains why airlines often cut their ticket prices at the last-minute in order to fill the remaining empty seats on their flights?

• A)Fixed costs in the airline industry are very large, but the marginal cost of flying one more passenger is very low.
• B)Airlines receive a subsidy from the government for each flight that is fully booked and departs on time.
• C)The Federal Aviation Administration ranks each airline based on the percentage of flights that are fully booked. These rankings affect the decisions of firms to use a particular airline to fly their employees to business meetings.
• D)Cutting prices makes the airlines more popular with their customers, who may fly with the same airline in the future as the result of buying low-price tickets.

Understand the concept and implications of efficiency wages in the labor market.

Analyze the effects of labor unions on wages and employment levels.

Identify and explain different forms of labor market discrimination.

Understand the role of minimum wage laws and their impact on the labor market.

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Definitions:

Builders' Liens

Legal claims made by contractors or suppliers against a property they have worked on or supplied materials for, ensuring payment for their services.

Bankruptcy

A legal status for individuals or entities that cannot repay the debts they owe, leading to legal processes to resolve these debts.

Insolvency

Inability of a person to pay her debts as they become due.

Bulk Sale

A transaction where a business sells its inventory or a significant portion of its goods all at once, usually under conditions other than the ordinary course of business.