Question

Suppose on average Delta sold 1600 tickets per day on their nonstop flight from Atlanta to Los Angeles (this would represent about 80 percent capacity which may be reasonable for this industry). Assume they sold these tickets for $198 (the lowest price they were selling these tickets for in June 2002 according to the article). If their average total cost at that quantity of tickets was $183 then their ANNUAL profit (assuming 365 days in a year) on this flight was $___

Answer 1

Delta's nonstop flight from Atlanta to Los Angeles makes an annual profit of $8,760,000 by selling 1600 tickets per day at a profit of $15 each, taking into account an average cost of $183 per ticket and a selling price of $198.

Step-by-step explanation:

To calculate the annual profit for Delta's nonstop flight from Atlanta to Los Angeles, we need to consider the difference between the selling price and the cost per ticket, multiplied by the number of tickets sold daily, and then extended over the year.

We know that Delta sells 1600 tickets per day at $198 each and incurs an average total cost of $183 per ticket. The daily profit is, therefore, ($198 - $183) × 1600. Calculating this gives us a daily profit of $24,000. To find the annual profit, we multiply the daily profit by the number of days in a year, which is 365.

The annual profit is thus $24,000 × 365, which equals $8,760,000.