American Airlines makes numerous nonstop flights from Chicago's O'Hare Airport to the airport at Dallas-Fort Worth. The distance between those two cities is 1,000 miles. The only variable cost, fuel, costs $.06 for each passenger-mile it flies. Bob, on his way to an emergency business meeting, buys a ticket in coach class for $1,300 at the very last minute. The marginal cost of flying Bob from Chicago to Dallas-Fort Worth is:

Question

Quizplus · Accepted Answer

The marginal cost is the additional cost of flying one more passenger. Since the only variable cost is fuel at $0.06 per passenger-mile, and the distance is 1,000 miles, the marginal cost for Bob is 1,000 miles * $0.06 = $60.

American Airlines Makes Numerous Nonstop Flights from Chicago's O'Hare Airport