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Airways Express has an evening flight from Los Angeles to New York with an average of 80 passengers and a return flight the next afternoon with an average of 50 passages. The plane makes no other trip. The charge for the plan remaining in New York overnight is $1,200 and would be zero in LA. The airline is contemplating eliminating the night flight out of LA and replacing it with a morning flight. The estimated number of passengers is 70 in the morning flight and 50 in the afternoon flight. The one way ticket for any flight is $200. The operating cost of the plan for each flight is $11,000. The fixed cost for the plane are $3,000 per day whether it flies or not.

A) Should the airline replace its night flight from LA with a morning flight?

B) Should the airline remain in business?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M940806

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