Additional Application Late in the Day on August 7,2006 Numerous U.S.airlines Cut

question 119

Multiple Choice

Additional Application
Late in the day on August 7,2006 numerous U.S.airlines cut their fares on leisure travelers.These included American Airlines,Delta,Continental,and Southwest.This fare cut,which was approximately 4 to 8 percent,occurred during a period of rising fuel costs and a record number of seats being filled.If costs are up and demand is strong,why did these airlines reduce their prices on this class of passengers? The explanation is that they were following the lead of United.United Airlines is the implicit price leader in this industry and many other carriers watch closely what the leader does and base their decisions on the leader's actions.Such behavior is not uncommon in an industry dominated by a few large firms.
"United Airlines sparks fare war," August 9,2006,retrieved November 3,2006 from http://money.cnn.com/2006/08/09/news/companies/airfares/index.htm.
-What market structure does the airline industry most likely resemble?

• A)monopoly
• B)oligopoly
• C)monopolistic competition
• D)perfect competition

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Definitions:

Visual Agnosia

A neurological disorder characterized by the inability to recognize objects despite having normal vision.

Ventral Stream

A pathway in the brain's visual cortex involved in object recognition and form representation, running from the primary visual cortex to the lower temporal lobe.

Dorsal Stream

The pathway in the brain that processes spatial and motion information, extending from the occipital lobe to the parietal lobe, often referred to as the "where" pathway.

Mirror Neurons

Neurons that fire both when an individual performs an action and when they observe the same action performed by another, implicated in learning, empathy, and understanding intentions of others.