Coastal Airlines Has a Significant Presence at the San Jose

question 60

Multiple Choice

Coastal Airlines has a significant presence at the San Jose International Airport and therefore operates the Emerald Club, which is across from gate 36 in terminal 1. The Emerald Club provides food and business services for the company's frequent flyers. Consider the following selected costs of Club operation:
1) Receptionist and supervisory salaries
2) Catering
3) Terminal depreciation (based on square footage)
4) Airport fees (computed as a percentage of club revenue)
5) Allocated Coastal administrative overhead
Management is exploring whether to close the club and expand the seating area for gate 36. Which of the preceding expenses would the airline classify as unavoidable?

• A) 3.
• B) 4.
• C) 5.
• D) 3, 5.
• E) None of the answers are correct.

---

Definitions:

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually pay.

Consumer Surplus

The contrast between the theoretical sum consumers are prepared to pay and the practical sum they pay for a good or service.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service compared to its market price, representing their net benefit.

The Nutty Nutcracker

A whimsical, often humorous adaptation of the traditional "Nutcracker" ballet, integrating various contemporary characters and pop culture references.