Problem:
Imagine Widgets Airlines, Inc. operates 18-seat commercial flights between New York City and Washington, DC. After 10 seats have been sold on each aircraft, the company has reached the break-even point. Should Widgets consider offering a discounted fare for seats 11 through 18? What are the advantages and disadvantages of not offering a discount on seats 11 through 18? What are the advantages and disadvantages of offering a discount on seats 11 through 18? How would you decide how much of a discount, if any, could be offered? What effect would the discount have on the financial statements of Widgets Airlines, Inc.?