Government regulations that require airlines to serve routes for which the maximum price that pas?sengers are willing to pay for a trip fall short of the minimum price that sellers are willing to accept are likely to cause losses in efficiency.

Question

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When airlines are required to serve routes where the demand is lower than the cost of operation, they will incur losses in efficiency as they cannot cover their costs or make a profit. This can lead to reduced service quality or even bankruptcy in extreme cases.

Government Regulations That Require Airlines to Serve Routes for Which