Three Airlines Account for Most of the Air Traffic in and Out

question 65

Multiple Choice

Three airlines account for most of the air traffic in and out of a local city.If the three airlines joined together in setting fares and air travel schedules,economists would say that they were acting as:

• A) monopolistic competitors, as each firm would have to differentiate its airline services from its rivals.
• B) perfect competitors, as each firm would sell travel services at the same fares as the other airlines.
• C) a cartel, as the three airlines together would attempt to coordinate policies in the local market to jointly maximize profits.
• D) none of the above

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Definitions:

Cost Estimate

An approximation of the expected cost to complete a project, task, or transaction, based on available information.

Cost Driver

A factor that causes a change in the cost of an activity or production process, such as machine hours or labor hours.

Resource Driver

A factor that causes a change in the consumption of resources in the production of a product or service.

Activity Management

The process of planning, controlling, and monitoring resources and tasks to achieve specific business goals.