In 1994, TipTop Airlines reported an increase in the total number of passengers it carried from the year before, but a decrease in total revenues — even though prices for its tickets on all routes remained unchanged during the two-year period.

Which of the following, if true, best reconciles the apparent paradox described above?

Answer Choices

Correct answer marked below

TipTop Airlines was a victim of a mild recession in 1994.

Total passenger miles were up in 1994.

Fuel costs remained constant during the two-year period.

Passengers traveled shorter (and thus less expensive) distances in 1994.

Correct

TipTop did not buy any new airplanes or equipment in 1994.

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Comments

AvilashAug 17

The paradox is weird until you realize more people doesn't mean more money. D explains it — shorter trips cost less. Classic trap about counting passengers vs. revenue.

AgapiAug 30

wait, if tickets on all routes stayed the same price, how do shorter trips change revenue? A shorter trip is a different route, so it's a cheaper ticket, right?

SwapnilJul 19

thanks, helpful

PravleenJul 20

Got this one quick. More passengers, less money = they must have paid less per person on average.

AnishApr 28

huh I picked B at first because more passenger miles sounds like more activity, but that would actually increase revenue not decrease

ArthurMay 8

same lol. B is the opposite direction, it makes the paradox worse not better

What this question tests

What it tests

Whether you can explain an apparent contradiction in a way that makes both facts true.

Common trap

Picking an option that explains one side of the paradox while making the other side false.