George, Jerry, and Harry Are Passengers on a Flight from Chicago

question 7

Multiple Choice

George, Jerry, and Harry are passengers on a flight from Chicago to New York. They injure their legs when their seatbelts fail and become unfastened during take-off. The airline is sued by all three together for injuries caused, and the airline is found to be negligent and is directed by the court to pay damages to the injured parties. Which of the following parties is entitled to recover maximum damages?

• A) George, a retired professor who gets a pension of $50,000 a year
• B) Jerry, a football player who earns $2 million a year
• C) Harry, a chartered accountant who earns $200,000 a year
• D) George, Jerry, and Harry

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Definitions:

Fixed Costs

Business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Expenses that change in proportion to the level of production or sales volume, such as raw materials or direct labor costs.

Profit

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes involved in sustaining the activities.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance.