Question
Air Atlantic is considering a new service between two cities. Its existing planes, each of which has a capacity of carrying 240 passengers, could be
Air Atlantic is considering a new service between two cities. Its existing planes, each of which has a capacity of carrying 240 passengers, could be used for one flight a week with fixed costs of $30,000 and variable costs amounting to 50% of the ticket price.
(a) (10 marks) Air Atlantic is thinking of charging $200 per ticket. How many passengers will the airline need on each flight to break even? Find the break-even point algebraically and by using an EXCEL graph. Attach the printout or copy your EXCEL graph into your assignment submission.
(b) (4 marks) Based on your analysis from part (a and without any additional calculations, will Air Atlantic realize a profit or a loss if 240 seats are sold for a flight? Does the break-even number of passengers from part (a) seem reasonable? Explain briefly.),
(b) (4 marks) What price per seat should Air Atlantic charge to break-even on a full flight? Find the break-even ticket price algebraically.
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