An airline having 5 unoccupied seats on a flight from California to Chicago decides to sell these tickets at $300, which is less than its average cost per ticket of $450.Which of the following might have prompted this decision to sell tickets below cost?

Question

Quizplus · Accepted Answer

The decision to sell tickets below the average cost per ticket suggests that the marginal cost of selling these additional tickets is lower than the average cost. In other words, the airline can sell these extra seats without incurring significant additional costs, so selling them at a lower price is still profitable. Thus, the airline likely considered the marginal cost of filling these empty seats before deciding to sell them at a lower price.

An Airline Having 5 Unoccupied Seats on a Flight from California