Author Question: Airline regulation by the CAB kept prices the same on any route and also set prices high. This led ... (Read 28 times)

big1devin · **on:** Jul 1, 2018

Airline regulation by the CAB kept prices the same on any route and also set prices high. This led airlines to offer high quality service, which raised costs to the level of prices.

Indicate whether the statement is true or false

Question 2

Road pricing will improve the allocation of resources to transportation.

Indicate whether the statement is true or false

poopface · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

T Airline regulation by the CAB was misguided and resulted in a nonoptimal system of air travel.

Answer to Question 2

T Travelers on roads do not pay the marginal social costs of their travel, and road pricing can correct the resulting faulty pricing.