Final answer:
When an airport operator buys one of the two coffee shops it rents space to, it might adjust the rent for the independent shop based on competitive tactics similar to those used by airlines or based on the shop's ability to cover variable costs and minimize losses. Regulatory and public relation considerations may also influence the operator's rent pricing decision.
Step-by-step explanation:
The change in rent charged by an airport operator who buys one of two coffee shops it leases space to may be influenced by various economic principles. In examining a scenario where a large airline slashes prices to eliminate competition from a start-up, we can draw parallels to determine potential rent changes. If the airport operator now owns one coffee shop, it may have less incentive to maintain competitive rent prices for the other, independent coffee shop. The airport operator could potentially raise the rent for the independent coffee shop to drive out the competition, similar to the airline's strategy. However, this decision could also be affected by regulatory and public relation considerations, which might prevent such aggressive competitive tactics.
When looking at a Yoga Center in different financial scenarios, we can further understand economic decisions related to fixed and variable costs. If the airport operator's coffee shop is not generating enough revenue to cover increased variable costs, and if the price is below the minimum average variable cost, the operator might close the coffee shop or re-evaluate the rent structure to minimize losses. In contrast, if the revenue covers the losses, the operator may choose to keep the coffee shop open despite the competition from the other shop.