In order to remain competitive, Big Bus Lines must reduce its average ticket price by 15%. However, the firm still wants to remain profitable. Which of the following options would allow Big Bus Lines to remain profitable while dropping its ticket prices?

A : decreasing its variable costs by at least 15%

B : increasing its variable cost per ticket by at least 15%

C : decreasing its number of passengers by at least 15%

D : decreasing its total fixed costs by at least 15%

Question

Gerald Bishop

Business

1 October, 22:51

In order to remain competitive, Big Bus Lines must reduce its average ticket price by 15%. However, the firm still wants to remain profitable. Which of the following options would allow Big Bus Lines to remain profitable while dropping its ticket prices?

A : decreasing its variable costs by at least 15%

B : increasing its variable cost per ticket by at least 15%

C : decreasing its number of passengers by at least 15%

D : decreasing its total fixed costs by at least 15%

+1

Answers (1)

Know the Answer?

Cabrera · Answer 1

A : decreasing its variable costs by at least 15%

Explanation:

Variable costs depend on the number of passengers they transport as there will be a decrease of the 15 %in the income received by each passenger. Then, it must be an equal reduction on the expenses generated by each passenger in order to remain competitive.