Question

Suppose the government is considering penalizing airlines $27,500 per passenger each time passengers are made to remain on the plane on the tarmac for more than three hours before a flight. True or False: The threat of this fine incentivizes airlines to cancel fewer flights than before.

Answer 1

Answer:

True

Explanation:

If this $27,500 fine is actually per passenger, it could greatly incentivize airlines to cancel fewer flights than before. Consider that, most airline tickets are far lower than  $27,500, so if airlines are paying fines worth many times more than they actually collect per individual tickets, they will incure great losses.