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Standby Passengers on Airlines Who Pay Low Rates for Seats

Question 177

Multiple Choice

Standby passengers on airlines who pay low rates for seats benefit from the low price. How are the airlines affected?


A) They lose, because the standby passengers do not cover the full cost of the seats.
B) They gain, because the additional revenue covers the "fixed costs" of the flight.
C) They lose, because the gain of the passengers must necessarily come at the expense of the airline.
D) They benefit as long as the additional revenue from the passengers exceeds the marginal cost.

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