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

Question

Fernando Crane

Business

13 March, 23:14

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

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Answers (1)

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Antoine Watkins · Answer 1

The marginal cost of additional passengers is very small.

Explanation:

Marginal cost of adding extra passenger is very low or negligible. Thus, it will be profitable to offer seat to standby customers at discount. If Airline does not offer this seat to standby customers, it will get nothing. Thus, it is rational decision to offer it at discounted rate. Firm has to incur very small extra cost in form of facilities to new customer.