A perfectly competitive airline is flying between two cities. The airline has the following costs associated...

A perfectly competitive airline is flying between two cities. The airline has the following costs associated with the flight:

Crew $5000

Plane rental $2000

Fuel $1000

Landing fee $1000

The airline has an average of 40 passengers paying an average of $200 for this flight.

Do you think the airline should be flying between the two cities? Evaluate from a short-run and long-run perspective. Draw two graphs, the first one showing the short run and the second one showing the long run. The graphs are not to be number specific.

**Please answer all parts of the question!**

Expert Solution

Rahul Sunny answered 2 years ago

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