Which of the following statements are most likely to be true for the air transportation industry?
(i) in the short run, the cost of the airplane is sunk
(ii) the opportunity cost of a flight is the variable cost
(iii) as long as total revenue exceeds fixed cost, the airlines should continue operating

Question

Quizplus · Accepted Answer

In the short run, the cost of the airplane is considered sunk because it cannot be recovered. The opportunity cost of a flight is typically the variable cost, as these are the costs that can be avoided if the flight does not operate. However, airlines should continue operating as long as total revenue exceeds variable costs, not just fixed costs.

Which of the Following Statements Are Most Likely to Be