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Airlines give away more than 10 million tickets each year through their frequent flyer programs, with the typical airline awarding a free ticket for...

Airlines give away more than 10 million tickets each year through their frequent flyer programs, with the typical airline awarding a free ticket for each 25,000 miles flown on the airline. The average airline ticket costs $500 and is for a 2,500-mile round trip. Given this information, evaluate the following statement: Airlines could have the same effect on demand by eliminating their frequent flyer programs and simply lowering the average ticket price by 10 percent.

This question was asked on Mar 17, 2010.

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