For Which of the Following Reasons Are Alliances in the Airline

question 45

Multiple Choice

For which of the following reasons are alliances in the airline industry unstable?

• A) Unstable industries make for unstable alliances.
• B) The potential for firms to take opportunistic actions is too widespread.
• C) The industry is declining and profits are not sufficient to divide among alliance partners.
• D) The alliances require cooperation among firms that must also compete with one another.

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Definitions:

Average Variable Cost

The total variable costs divided by the quantity of output produced, representing the variable cost of producing each unit of output.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of units produced, showing the average cost per unit.

Long Run

A period during which all factors of production and costs are variable, allowing for the adjustment of all inputs and the adoption of new technology.

Marginal Output

The additional output produced as a result of using one more unit of a particular input while keeping other inputs constant.