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Question: 2 understanding the role of fixed cost in the short...

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2. Understanding the role of fixed cost in the short run Aa Aa Consider an airlines decision about whether or not to cancel a particular flight that hasnt sold out. The following table provides data on the total cost of operating a 100-seat plane for various numbers of passengers Number of Total Cost (TC) 35,000 55,000 65,000 67,000 68,000 68,500 69,000 70,000 70,500 70,800 70,900 Passengers 10 20 30 40 50 60 70 80 90 100 Given the information presented in the previous table, the total fixed cost to operate this flight is At each ticket price, a different number of consumers will be willing to purchase tickets for this flight. Use the following demand schedule to complete the questions that follovw Price (Dollars per ticket) 800 600 450 150 Quantity Demanded (Tickets per flight) 20 80 100Assume that the price of a flight is fixed for the duration of ticket sales. Complete the following table by computing total revenue, total cost, total variable cost, and profit for each of the prices listed. (Hint: Be sure to enter a minus sign before the number if the numeric value of an entry is negative.) Profit (TR-TC) Price (Dollars per ticket) 800 600 450 150 Total Revenue Total Cost Total Variable (TR) (TC) Cost (TVc) Given this information, the profit-maximizing price is per ticket, and seats out of 100 will be purchased In this case, which of the following statements are true about the market at this price-quantity combination? Check all that apply The airline is operating at too big a loss and should, therefore, cancel this flight Profit is negative Total revenue is greater than total variable cost Price is greater than average total cost If total fixed cost decreases to $15,000, does this change the production decision of the airline in the short run? Yes No True or False: It is always more profitable to operate a full flight at a lower cost per ticket than a partially full flight at a higher price O True O False

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