For the past few months, an airline has had 25% empty seats (unsold roundtrip tickets) on its Boston to New York City route and is deciding whether to change the price of its roundtrip tickets. The costs to the airline of flying between Boston and New York City do not depend on the number of passengers. There are several competing airlines offering the same service between Boston and New York City and there are train and bus options available to travelers as well. Based on this information, your best advice is: A. Keep prices the same. B. Raise prices because total revenues will increase. C. Lower prices because total revenues will increase. D. Either raise or lower prices since total revenues are not being maximized.

For the past few months, an airline has had 25% empty seats (unsold roundtrip tickets) on its Boston to New York City route and is deciding whether to change the price of its roundtrip tickets. The costs to the airline of flying between Boston and New York City do not depend on the number of passengers. There are several competing airlines offering the same service between Boston and New York City and there are train and bus options available to travelers as well. Based on this information, your best advice is: A. Keep prices the same. B. Raise prices because total revenues will increase. C. Lower prices because total revenues will increase. D. Either raise or lower prices since total revenues are not being maximized.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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