Estimate from a short and long run viewpoint.
An airline is flying among two cities. The airline has the subsequent costs associated with the flight:
|
Crew
|
$4000
|
|
Plane daily depreciation
|
$2000
|
|
Fuel
|
$1000
|
|
Plane daily insurance
|
$2000
|
|
Landing fee
|
$1000
|
The airline has an average of 40 passengers paying an average of $200 for this flight. Do you think the airline should be flying among the two cities? Evaluate from a short-run and long-run perspective.