Answer to Question #272042 in Microeconomics for van

Question

Two small airlines provide shuttle service between Las Vegas and Reno.  The services are alike in every respect except that Fly Right bought its airplane for $500,000, while Fly by Night rents its plane for $30,000 a year.  If Fly Right were to go out of business, it would be able to rent its plane to another airline for $30,000.  Which airline has the lower costs

Answer 1

The $500000 cost of the plane purchased by Fly Right is a fixed cost, and hence will be considered sunk costs.

The expenses are same since both airlines' implicit or opportunity costs are $30000 per year.

Hence neither, the costs are identical.