An airline can profit by offering standby customers an unsold seat at a substantial discount just before takeoff because
A)additional passengers are needed to balance the load.
B)the marginal cost of additional passengers is very small.
C)additional passengers add little to fixed costs.
D)such passengers add more to profits than do those with reserved seats.

Question

Quizplus · Accepted Answer

Standby passengers do not generate any additional fixed costs, and the marginal cost of adding one more passenger is very small, as the plane is already scheduled to take off. By offering the standby passengers an unsold seat at a discount, the airline is generating revenue without incurring any significant additional costs, thus increasing profitability.

An Airline Can Profit by Offering Standby Customers an Unsold