Suppose There Is Only One Airline That Travels from One

question 68

Multiple Choice

Suppose there is only one airline that travels from one island to another. Assume that business travellers have a low elasticity of demand for air travel. Holiday travellers on the other hand are flexible and are sensitive to price. Price discrimination can occur because:

• A) business travellers have to travel.
• B) there is a monopoly.
• C) of the difference between price elasticities.
• D) there are no close substitutes.

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Definitions:

Merchandise Purchases

The total cost of goods bought for resale during an accounting period. This includes both cash and credit purchases.

Periodic Inventory System

An inventory accounting method where updates to inventory levels are made at specific intervals, not continuously.

Ending Inventory

The value of the goods still available for sale by a company at the end of an accounting period.

Retained Earnings

The portion of net earnings not paid out as dividends but retained by the company for reinvestment.