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.

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Definitions:

Excess Fat

Body fat that exceeds the normal, healthy range and can increase the risk of health problems like heart disease, diabetes, and certain cancers.

Cardiovascular Disease

A class of diseases that involve the heart or blood vessels, such as coronary artery disease, heart attacks, and stroke.

Essential Fat

The minimum amount of body fat necessary for the proper functioning of hormonal, reproductive, and immune systems.

Central Nervous System

The complex of nerve tissues that controls the activities of the body and comprises the brain and the spinal cord.