Which of the Following Explains Why Frequent Flier Programs Reduce

question 36

Multiple Choice

Which of the following explains why frequent flier programs reduce contestability in the airline industry?

• A) Frequent flier programs make demand for each airline more elastic and thus lead to more competition.
• B) Frequent flier programs make demand for each airline more inelastic and thus lead to more monopoly power and higher prices.
• C) Frequent flier programs increase demand for each airline, ultimately leading to increased competition and lower prices.
• D) Frequent flier programs lead to lower switching costs and therefore less contestability in the market.

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Definitions:

Long-term Memory

The phase or type of memory responsible for the storage of information over an extended period, ranging from days to decades.

Encoding Failure

The inability to store information into long-term memory, resulting in the loss of that information over time.

Prefrontal Cortex

A region of the frontal lobe of the brain implicated in a variety of complex behaviors, including planning, decision making, and moderating social behavior.

Temporal Lobes

Sections of the brain located on each side of the brain responsible for processing auditory information and are involved in memory, speech, and emotion.