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14 March, 14:58

In order to remain competitive, Big Bus Lines must reduce its average ticket price by 15%. However, the firm still wants to remain profitable. Which of the following options would allow Big Bus Lines to remain profitable while dropping its ticket prices?

A : decreasing its variable costs by at least 15%

B : increasing its variable cost per ticket by at least 15%

C : decreasing its number of passengers by at least 15%

D : decreasing its total fixed costs by at least 15%

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Answers (1)
  1. 14 March, 16:09
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    A : decreasing its variable costs by at least 15%

    Explanation:

    Variable costs depend on the number of passengers they transport as there will be a decrease of the 15 %in the income received by each passenger. Then, it must be an equal reduction on the expenses generated by each passenger in order to remain competitive.
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