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:

Public Goods

Goods or services that are non-excludable and non-rivalrous, meaning they can be used by everyone without diminishing their availability to others, such as public parks or national defense.

Private Firms

Businesses that are privately owned, not traded publicly on stock exchanges, and typically managed by the owner or shareholders.

Public Good

Without profit motive, a product or service is made available to all societal members, courtesy of either governmental or private benefactors.

Nonrivalry

A characteristic of a good or service whereby its consumption by one individual does not reduce its availability for consumption by others.