John Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfis base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. The following is a recent months activity in the form of a cost-volume-profit income statement.

Fare revenues (400 passenger flights)		$48,000
Variable costs
Fuel	$14,000
Snacks and drinks	800
Landing fees	2,000
Supplies and forms	1,200	18,000
Contribution margin		30,000
Fixed costs
Depreciation	3,000
Salaries	15,000
Advertising	500
Airport hangar fees	1,750	20,250
Net income		$ 9,750

Instructions

1. If ticket prices were decreased by 10%, passenger flights would increase by 25%. However, total variable costs would increase by the same percentage as passenger flights. Should the ticket price decrease be adopted?