Author Question: Three airlines account for most of the air traffic in and out of a local city. If the three airlines ... (Read 44 times)

geodog55 · **on:** Jun 30, 2018

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. none of the above

Question 2

If too many high risk policyholders migrate to a comprehensive health insurance plan which covers a wide range of treatments, the price of a policy must increase.
Indicate whether the statement is true or false