Three Airlines Account for Most of the Air Traffic in and Out

question 52

Multiple Choice

Three airlines account for most of the air traffic in and out of a local city.If the three airlines joined together in setting fares and air travel schedules, economists would say that they were acting as:

• A)monopolistic competitors, as each firm would have to differentiate its airline services from its rivals.
• B)perfect competitors, as each firm would sell travel services at the same fares as the other airlines.
• C)a cartel, as the three airlines together would attempt to coordinate policies in the local market to jointly maximize profits.
• D)kinked demand curve oligopolists.

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Definitions:

Investment Model

A theory in relationship psychology that examines commitment as a function of satisfaction, quality of alternatives, and investment size.

Alternatives

Other options or choices available in a situation from which a selection can be made.

Investments

The allocation of resources, usually financial, into assets or endeavors expected to yield returns or profits over time.

Distress-Maintaining

Cycles or patterns of behavior and thought that contribute to preserving or increasing psychological distress.