Suppose That Currently There Are No Airlines Serving the City

question 35

Multiple Choice

Suppose that currently there are no airlines serving the city of South Podunk. Both Accommodating Airlines and Friendly Flyers are looking to enter that market. (They are the only two.) The figure shows in extensive form the possible outcomes of the two firms' decisions. The payoffs represent, in thousands per month, the profit (or loss) the firm will realize from its decision. What does this extensive form game indicate about the decision to enter the South Podunk market?

• A)Accommodating Airlines has a first-mover advantage in this game.
• B)Both airlines are better off by entering this market.
• C)Friendly Flyers has a first-mover advantage in this game.
• D)The outcome of this game is a prisoner's dilemma.

Understand the dynamics of housing prices leading up to and following the 2008 crisis.

Realize the risks and rationales behind investing in economic bubbles.

Differentiate between various policy responses to environmental issues like carbon emissions.

Understand the real-world consequences of economic bubbles on consumers and financial institutions.

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Definitions:

Commodities

Basic goods used in commerce that are interchangeable with other goods of the same type.

Commission-Only

Describes a compensation structure where an employee or agent is paid solely based on the commission from the sales they generate.

Commission

A service charge assessed by a broker or agent for facilitating a transaction, typically a percentage of the transaction's total value.

Merchandise

Goods or items that are available for purchase in retail, including a wide range of products from clothing to electronics.