When a nation's real per capita Gross Domestic Product (GDP) increases, which of the following is TRUE?
A. Every individual in that nation shares in the economic gain.
B. We don't know who has most benefited from economic growth unless we look at the distribution of income.
C. A nation must channel most of the economic gains to its poorest citizens.
D. Low income people are guaranteed to lose; they never share in their nation's economic gains.
Answer: B
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The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, what will happen if the government offers a $30 subsidy to airlines that serve this route?
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