Question

Due to high jet fuel costs, airline carriers are looking for new ways to increase revenues and thereby counteract declining profits. Airline A has proposed increasing the number of passengers that can fit on its airplanes by creating several standing room only "seats" in which passengers would be propped against a padded backboard and held in place with a harness. This proposal, since it relates to passenger safety, cannot be implemented without prior approval by the Federal Aviation Administration.
The above statements, if true, indicate that Airline A has made which of the following conclusions?A. The addition of standing room only "seats" will generate more revenue than the cost of ensuring that these seats meet safety standards.B. The Federal Aviation Administration will approve Airline A's specific proposal.C. The revenue generated by the addition of standing room only "seats" is greater than the current cost of jet fuel.D. There are no safer ways in which Airline A can increase revenues.E. Passenger safety is less important than increasing revenue.

Answer 1

Answer:

The answer is: A) The addition of standing room only "seats" will generate more revenue than the cost of ensuring that these seats meet safety standards.

Explanation:

The only way Airline A can increase its profit is to implement new services that will generate higher revenue than their costs.

Airline A knows that its idea of creating standing room only seats will have to comply with FAA approved safety standards. The airline probably calculated the costs of complying with the FAA regulations and implementing the system is less than the possible revenue that new service can generate.