As a Toronto Business Owner Who Does a Lot of Flying,you

question 201

Multiple Choice

As a Toronto business owner who does a lot of flying,you are keenly aware of even small changes in airfare from Toronto to Vancouver.You have flown this route long enough to know that each airline is essentially a perfect substitute for the others.You notice that every time the largest airline changes the price,smaller airlines follow,but the smaller airlines are always priced slightly below the fare of the largest airline.This industry could BEST be described as one with:

• A) price wars.
• B) non-price competition.
• C) cartel behaviour.
• D) price leadership.

---

Definitions:

Competitors

Other businesses or individuals that offer similar goods or services within the same market, competing for the same customers.

Oligopolist

A market participant in an oligopoly, where a small number of firms dominate the industry, influencing prices and market conditions.

Kinked Demand Curve

A theory in economics that suggests that prices in a monopolistic competition scenario may remain stable because competitors will match price decreases but not price increases.

Price

The amount of money expected, required, or given in exchange for something.