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:

Conchae

Curved bony structures in the nasal cavity that help to filter, humidify, and warm inhaled air.

Nasal Cavity

A large air-filled space above and behind the nose in the middle of the face, involved in breathing and smelling.

Epithelium

Layers of cells covering the body surfaces, both internal and external, and forming glands.

Silicosis

A lung disease caused by inhaling fine particles of silica, most commonly in the mining industry, leading to inflammation and scarring in the lungs.