If Qualls Quality Airline cuts its domestic fares by 30%
A) its fixed costs will decrease.
B) profit will increase by 30%.
C) a profit can only be earned by decreasing the number of flights.
D) a profit can be earned either by increasing the number of passengers or by decreasing variable costs.

Question

Quizplus · Accepted Answer

By cutting domestic fares by 30%, Qualls Quality Airline can potentially increase the number of passengers, resulting in a higher revenue. This could lead to a profit if variable costs (such as fuel and maintenance) are kept low. The fixed costs are not likely to decrease with the cut in fares. Decreasing the number of flights alone may not necessarily lead to a profit, as it may lead to a decrease in revenue as well.

If Qualls Quality Airline Cuts Its Domestic Fares by 30