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:

Appraisal Value

an estimated market value of an asset, typically determined by a professional appraiser based on condition, market trends, and other factors.

Purchase

The act of acquiring goods or services, often involving a legal transaction.

Note Payable

A written promise to pay a specific amount of money, usually including interest, by a certain date.

Mortgage

A legal agreement by which a bank or other creditor lends money at interest in exchange for taking the title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.