Multiple choice

Directions: For this question, select the best of the answer choices given.

Several airlines have recently intensified their fierce competition for business by offering tickets that, if purchased 2 days in advance, cost as much as 40 percent less than the heretofore lowest-priced “super-saver” tickets, which require a 30-day advance purchase. The airlines' long-term gains from tickets bought under this new plan will be enormous because, unlike earlier discount tickets, these are not refundable. The author assumes which of the following about discounted airline tickets in predicting long-term gains in airline revenue?

  1. More discounted, advance purchase tickets are purchased than are actually used.

  2. Tickets requiring 30-day advance purchase are not profitable for airlines.

  3. Few business travelers have taken advantage of 30-day advance purchase tickets.

  4. Airlines will have to discontinue offering 30-day advance purchase tickets when they begin offering 2-day advance purchase tickets.
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A Correct answer
Explanation

The author's argument about long-term gains from non-refundable discounted tickets assumes that a significant number of these tickets will be purchased but not actually used. If all purchased tickets were used, airlines would only lose revenue from the discount. The unrefundable nature becomes profitable specifically when passengers purchase but don't use the tickets. This assumption is necessary for the claimed "enormous" long-term gains.

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