Suppose Two Brothers Own Identical Skydiving Companies but Have Decided

question 57

Multiple Choice

Suppose two brothers own identical skydiving companies but have decided to experiment with different pricing structures.The older brother's company,Air Adventures,sets its prices using the profit-maximizing rule,while the younger brother's company,Sky Warriors,sets its prices using a two-tiered,price-discrimination model.Assuming that both companies face the same market demand curves,marginal costs,and costs of production,and wield significant market power for their service area,which of the following is most likely to occur?

• A) Air Adventures will generate a similar net revenue to Sky Warriors.
• B) Sky Warriors will generate a higher net revenue than Air Adventures.
• C) Sky Warriors will generate a lower net revenue than Air Adventures.
• D) Air Adventures will generate a higher net revenue than Sky Warriors.
• E) Sky Warriors will eventually switch to the Air Adventures model.

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Definitions:

Stable Internal Characteristics

Traits or attributes within an individual that are enduring and consistent across different situations and over time.

Situational Attribution

is the process of attributing a person's behavior to external or situational factors, rather than to internal characteristics or dispositions.

Unfair Test

An evaluation or assessment that does not provide all individuals an equal opportunity to demonstrate their abilities, often due to bias or flawed design.

Ability

The capacity of an individual to perform tasks or skills effectively.