-The Above Figure Shows the Payoff to Two Airlines,A and B,of

question 12

Multiple Choice

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,what will happen if the government offers a $30 subsidy to airlines that serve this route?

• A) Both firms will enter profitably.
• B) Firm A will decide not to enter since firm B will.
• C) Firm B is still better off not entering.
• D) Neither firm will have a dominant strategy.

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Definitions:

Highly Concentrated Industry

An industry characterized by a small number of companies holding a large market share, which can lead to reduced competition and higher prices.

Kellogg's Cereals

A brand of breakfast cereals produced by the Kellogg Company, known for varieties like Corn Flakes and Frosted Flakes.

Homogeneous Oligopoly

A market structure featuring a small number of firms offering products or services that are largely identical or undifferentiated.

Virtually Identical

Items or situations that are almost the same or very closely resemble each other in most aspects.