If it costs 120000 for the airline company to fly the 200sea

If it costs $120,000 for the airline company to fly the 200-seat plane across the country, then they should never sell the ticket for less than $600. True/False?

Solution

True

For Firm to operate it is mandatory to recover it\'s cost from revenue earned atleast for break even.

Here in our case if airline company has a total cost of $120000 for 200 seaters then they should charge atleast (120000/200=$600) $600 per passenger to break even.

Therefore they should never sell ticket for less than $600