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Use the concept of Marginal Cost Analysis. Suppose that flying a 200-seat plane across the United States costs the airline $100,000. In this case, the

Use the concept of Marginal Cost Analysis.

Suppose that flying a 200-seat plane across the United States costs the airline $100,000. In this case, the average cost of each seat is $500 (that is: $100,000 200=$500).

Imagine that a plane is about to take off with two empty seats, and a standby passenger waiting at the gate will pay only $200 for a seat. What is the marginal cost of one additional passenger on the flight? If you were a supervisor in charge of this flight, under what circumstances would you sell the ticket to this standby passenger? Why?

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