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Three Airlines Account for Most of the Air Traffic in and Out

Question 74

Multiple Choice

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

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