The High Cost of Avoiding Baggage Fees
Please take some time to read the article attached to the link above and respond the following questions:
1. What were the sunk costs and marginal costs faced by the four men? Based on economic reasoning, was eating the oranges a rational decision?
2. Describe the circumstances under which an optimal solution would be to eat some, but not all, of the oranges. (Assume the men are aware of the potential disutility from getting ulcers.)
3. Most consumers have a strong dislike for being charged additional fees for things like checked bags. What are some of the benefits (other than revenue) of airlines continuing to charge them, even though consumers don't like it and fuel prices have come back down to pre-baggage fees levels?
Use the information you have learned in this chapter to elaborate in your responses.
I will also encourage you to conduct additional online research on the topic and economic issues to further substantiate your responses by using examples.
Work authenticity weighs heavily on assignment grade.
