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Cold Duck Airlines Flies Between Tacoma and Portland

Question 183

Multiple Choice

Cold Duck Airlines flies between Tacoma and Portland. The company leases planes on a year-long contract at a cost that averages $600 per flight. Other costs (fuel, flight attendants, etc.) amount to $550 per flight. Currently, Cold Duck's revenues are $1,000 per flight. All prices and costs are expected to continue at their present levels. If it wants to maximize profit, Cold Duck Airlines should


A) drop the flight immediately.
B) continue the flight.
C) continue flying until the lease expires and then drop the run.
D) drop the flight now but renew the lease if conditions improve.

Correct Answer:

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