I need help with the four bottom questions. Given this information, the profit m
ID: 1123565 • Letter: I
Question
I need help with the four bottom questions.Given this information, the profit maximizing price is ? per ticket, and ? seats out of 100 will be purchased.
In this case, which of the following statements are true about the market at this price quantity combination, check all that apply.
Fixed cost increases to 45,500, does this change the production decision of the airline in the short run?
True or false: is always more profitable to operate at a full flight at a lower cost per ticket than a partially full flight at a higher price.
Explanation / Answer
Fixed cost = $30000
TR = Price x Quantity (Quantity read from the table on quantity demanded corresponding to the given price)
VC = TC - FC
Profit maximizing price = $700 and 50 seats out of 100 will be purchased.
Correct options:
- Total revenue is greater than variable cost
- Profit is negative
No, the production decision of the airline should not change in the short run as Total revenue > Variable cost
The statement is false, it is not always profitable to operate a full flight (profitability would depend upon the quantity demanded)
P ($) TR ($) TC ($) VC ($) Profit ($) 900 0 30000 0 -30000 700 35000 57000 27000 -22000 300 21000 58500 28500 -37500 100 10000 59500 29500 -49500