Suppose That the Price Elasticity of Demand for Airline Flights

question 14

Multiple Choice

Suppose that the price elasticity of demand for airline flights between two cities is constant and equal to -1.5.If 4 airlines with equal costs are in Cournot equilibrium for this industry, then the ratio of price to marginal cost in the industry is

• A)8/7.
• B)9/8.
• C)7/6.
• D)3/2.
• E)None of the above.

---

Definitions:

Over-center Adjustment

A term related to the calibration or setting of a mechanism, such as a clutch or brake linkage, ensuring it operates over its center point for optimal performance.

Recirculating Ball

A steering mechanism where ball bearings recirculate in a loop within the steering gear, reducing friction and wear.

Worm and Roller

A type of steering gear that uses a worm gear and roller to convert rotational motion into linear motion, aiding in steering mechanisms.

Manual Steering Gears

These are mechanisms that allow a driver to manually control the direction of a vehicle, often found in older or specialty vehicles.