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 the minimum market entry quantity is 130 passengers per day, what is Fly Smart's profit when it commits to the entry-deterring quantity?
A. $60,000
B. $44,400
C. $33,600
D. $29,600
Answer: B
You might also like to view...
A natural oligopoly occurs when
a. few firms can afford to compete in the industry b. the minimum efficient scale is a large fraction of the market c. there are a large number of buyers and sellers of a standardized product d. minimum efficient scale is greater than total market demand at the price equal to minimum long run average total cost e. competitive pricing drives firms from the market
An increase in the price level means that a dollar buys __________ goods and services so the value of a dollar __________
Fill in the blank(s) with correct word
When the actual rate of inflation is less than the expected rate:
A. the unemployment rate will temporarily rise. B. firms will increase their output to recoup their falling profits. C. the unemployment rate will temporarily fall. D. firms will experience rising profits and thus increase their employment.
In the balance of payments of the United States, U.S. goods imports are recorded as a:
A. positive entry. B. capital account entry. C. current account entry. D. financial account entry.