Suppose that it costs £10 000 to ﬂy a jet from London to Amsterdam and the plane contains 100 passengers. If the number of passengers increases to 125, which of the following is likely to be true?

Question

Quizplus · Accepted Answer

The average fixed cost per passenger decreases when the number of passengers increases because the total fixed cost (£10,000 in this case) is spread over more passengers. With 100 passengers, the average fixed cost is £100 per passenger (£10,000 / 100). With 125 passengers, it falls to £80 per passenger (£10,000 / 125).

Suppose That It Costs £10 000 to ﬂY a Jet