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.

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Definitions:

Granite

A coarse-grained igneous rock composed mainly of quartz and feldspar.

Stromatolites

Layered structures formed by the growth of microbial mats, often found in fossil form and considered some of the oldest evidence of life on Earth.

Microscopic Creatures

Tiny organisms that can only be seen with the aid of a microscope, including bacteria, protozoa, and some fungi and algae.

Correlate

The process of establishing a relationship or connection between two or more variables, often used in scientific research to determine causal links or patterns.