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

question 62

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 happens if the government imposes a $20 per firm tax on firms that service this route?

• A) Neither firm has a dominant strategy.
• B) Not entering is a dominant strategy for both firms.
• C) Neither firm entering is a Nash equilibrium.
• D) Only firm A will enter.

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Definitions:

Current Liabilities

Current liabilities are financial obligations a company is due to pay within one year, including accounts payable, short-term debts, and other similar liabilities.

Proportion

A segment, piece, or amount looked at in relation to the entirety.

Acid-test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its quick assets, providing insight into its short-term liquidity without relying on inventory assets.

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of the business, whichever is longer.