. Costing a Service. Up-and-Away Airlines, a regional commuter airline, flies routes among mid-sized cities in the Midwest. The firm owns six airplanes, which can hold 150 passengers each. All routes are about the same distance, and all fares are \(\$ 55\) one way. The line operates 200 flights per month. Each flight costs \(\$ 2,000\) for gasoline, crew salaries, and so forth. Variable costs per passenger are \(\$ 5\), to cover meals and head taxes levied for each passenger departure at each airport. Other fixed costs are \(\$ 60,000\) per month.

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1. How many passengers must the airline carry on 200 flights to earn a \(\$ 30,000\) per month profit? What percentage of capacity does this number represent?

2. What impact does a \(\$ 1\) increase in airfare have on the capacity percentage needed to break even?
3. Comment on the cost behavior of each cost element.