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:

Competitive

Characterized by or involving competition; striving to gain or win something by defeating or establishing superiority over others.

Community-oriented

An approach or philosophy that emphasizes the importance of building and maintaining relationships within a community.

Solitary

Existing or carried out alone without the company of others.

Social Entertainment

Forms of entertainment that are social in nature, often involving interactive and participatory media like social networking services, online games, and live streaming platforms.