Problem:
Airline is flying between two cities. The airline has the subsequent costs associated with the flight:
Crew $4000
Plane daily depreciation $2000
Fuel $1000
Plane daily insurance $2000
Landing fee $1000
The airline has average of 40 passengers paying an average of $200 for this flight. Do you believe the airline must be flying between the two cities? Assess from the short-run and long-run perspective.