Calculate southwest economic profit

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During the first quarter, Southwest spent $300 million on jet fuel at a hedged price of $60 a barrel (or less). At the same time, Southwest's competitors had to pay spot prices of around $120 a barrel for jet fuel. During that quarter Southwest's accountants reported a profit of $34 million. If you were a Southwest shareholder during this period, should you be happy with these "profits?" Hint: calculate Southwest's economic profit and discuss using terms from class.

Reference no: EM132438140

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