If American Airlines purchased all of its competitors to become a monopoly, all else equal, price will _____, and output will _____.
A)fall; fall
B)fall; increase
C)increase; increase
D)increase; fall

Question

Quizplus · Accepted Answer

If American Airlines purchased all of its competitors to become a monopoly, they would have complete control over the market. As a result, they would have the ability to increase prices, so prices would increase. However, since they would be the only player in the market, they would also have to increase output to meet the demand of all consumers. Therefore, price would increase and output would decrease.

If American Airlines Purchased All of Its Competitors to Become