If a commercial airline starts offering maxi-saver fares at huge discounts to passengers who purchase tickets at least 30 days in advance and agree to stay over a Saturday night, what is the most likely effect upon first-class passenger service?
A) First-class fares will rise somewhat to compensate for the loss on other fares.
B) The demand for first-class service may fall somewhat because the price of a substitute good has decreased substantially.
C) The marginal cost of first-class service will rise somewhat because the total cost must be allocated among all passengers.
D) The marginal revenue from first-class service will rise somewhat because first-class service is now more clearly a superior good.
B
You might also like to view...
With the creation of the Federal Deposit Insurance Corporation, member banks of the Federal Reserve System ________ to purchase FDIC insurance for their depositors, while non-member commercial banks ________ to buy deposit insurance
A) could choose; were required B) could choose; were given the option C) were required, could choose D) were required; were required
The view that velocity is constant in the short run transforms the equation of exchange into the quantity theory of money. According to the quantity theory of money, when the money supply doubles
A) velocity falls by 50 percent. B) velocity doubles. C) nominal incomes falls by 50 percent. D) nominal income doubles.