There Is Much Evidence to Suggest That Airlines Are More

question 207

Multiple Choice

There is much evidence to suggest that airlines are more likely to match price cuts than price increases.Which of the following best explains this evidence?

• A)The law of demand which states that an increase in price leads to a decrease in quantity demanded.
• B)No one airline wants to be the first to renege on a tacit collusive agreement in which all airlines implicitly agree to match price cuts but not price increases.
• C)An airline fears that if it does not match a price cut, its sales may fall considerably but if it does not match a price increase, it will be able to attract customers away from its rivals.
• D)Airlines have different costs of production and therefore it is more difficult to agree on a price increase than on a price decrease.

---

Definitions:

Relationship

A connection, association, or involvement between two or more individuals, groups, or entities.

Negative Correlation

A relationship between two variables in which one variable increases as the other decreases, and vice versa.

Average Income

A measure of the middle income value for individuals or households within a specific group or country.

Dental Disease

Conditions affecting the teeth, gums, and other structures of the mouth, including cavities, gum disease, and oral cancer.