Suppose That Currently There Are No Airlines Serving the City

question 61

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. Which of the following statements is true about this game?

• A)The market represented is a collusive duopoly.
• B)The market represented is neither a collusive duopoly nor a Stackelberg duopoly.
• C)The market represented is a Stackelberg duopoly.
• D)The outcome of the game depends on who moves first into this market.

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Definitions:

Memory Set

A collection of items or information that a person can remember and recognize within a certain context or under specific conditions.

Feature Integration Theory

A psychological theory proposing that the perception of individual visual features (such as color, orientation, size) are initially processed independently and then integrated to form the perception of a whole object.

Controlled Processes

Cognitive operations that require attention, are usually performed deliberately, and are under conscious control.

Automatic Processes

Mental activities that occur without conscious awareness or effort, often developed through repeated practice or learning.