After a Number of Acquisitions, Air American Controls 75 Percent

question 135

Multiple Choice

After a number of acquisitions, Air American controls 75 percent of the U.S.market.It has been charged with "monopolizing" the U.S.air markets by the Justice Department.In its defense, the airline would want to introduce evidence that

• A)cross elasticities for air and rail travel were very high.
• B)income elasticities for air and rail travel were very high.
• C)price elasticity for air, rail, and auto travel were negative.
• D)management always considered the public interest when setting prices.

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Definitions:

Flexible Budgets

Budgets that can adjust or flex for changes in the volume of activity or other relevant factors, allowing for more accurate forecasts and analysis.

Contribution Margin

The selling price per unit minus the variable cost per unit, representing the incremental money generated for each product/unit sold.

Fixed Budget

A budget that is set for a specific period and does not change, regardless of variations in activity levels, sales volume, or other external factors.

Flexible Budget Amounts

Budget figures that are adjusted based on changes in the volume of activity, allowing for a more accurate reflection of costs under different operational levels.