In Figure 8.10, airline Fly Smart is initially a secure monopoly between two cities X and Y at point M, serving 300 passengers per day at the profit-maximizing price of $300 per ticket. Suppose that Fly Smart discovers that a second airline is contemplating entering the market. If Fly Smart accommodates the entry, what will its profit be?
A. $44,400
B. $33,600
C. $29,600
D. $16,800
Answer: D
You might also like to view...
Which of the following is an objective of macroeconomic stabilization?
(a) eliminating current account deficits. (b) controlling inflation. (c) restoring fiscal balance. (d) all of the above.
Suppose you like shoes and your income doubles. If shoes are a normal good, then an increase in your income will cause
a. the market demand for shoes to shift to the left b. the market demand for shoes to shift to the right c. your quantity demanded of shoes to decrease d. the market's quantity demanded of shoes to decrease e. market demand for shoes to shift to the left and your own quantity demanded of shoes to shift to the right
Loopholes have the effect of
a. encouraging particular patterns of behavior and favoring particular types of people. b. eroding the progressivity of the income tax. c. altering the pattern of economic incentives. d. All of the above are correct.
Drug companies are willing to spend millions of dollars on developing new drugs because
A.) their research will drive their competitors out of business. B.) they can patent the new drug and have a monopoly on its production and sale. C.) they can raise the prices on older drugs whose patents have expired. D.)they can produce unlimited quantities of the new drug.