If the marginal cost of flying the next flight is zero and one ...

[itsmyluck]

If the marginal cost of flying the next flight is zero and one passenger is on the plane and has paid 50,
 A) fixed cost would still be covered.
  B) the passenger should be given a bus ticket.
  C) losses would get bigger.
  D) the next flight should be flown.

Question 2

Explain the concept of an empty core.

[Dominic]

Answer to Question 1

D

Answer to Question 2

An empty core is one where the grand coalition is impossible to hold because one or more parties to the negotiation do not get the required payoff. When the core is empty, the proposals and counterproposals of negotiators to reallocate the payoffs can cycle without ever settling into an unblockable allocation. There is no set of side payments that the group's members can make among themselves that will not leave some coalition with a credible threat to exit.