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Should flights to and from gainesville be schedules
Course:- Microeconomics
Reference No.:- EM13700096




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Southern Airways, a small regional airline, has a daily late evening flight into Atlanta. The plane must be in Atlanta at 8:00 am each morning for a flight into Richmond, Virgina. Unfortunately, the charge for a plane remaining overnight in Atlanta is $500. One alternative is to schedule a 9:00 pm flight to Gainesville, Florida (a one hour trip), and a 6:00 am flight back to Atlanta. There is no change for an overnight stay in Gainsville. However, the flights to and from Gainesville will only average only about ten passengers each at a one-way fare of 50. The operating cost of the plane is 600 per hour. The company's total fixed costs (which are unaffected by the decision to be made here) are allocated to each flight at the rate of $300 per hour. Should the plane stay in Atlanta overnight, or should flights to and from Gainesville be schedules. PLEASE EXPLAIN YOUR DECISION.




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