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Category > Economics Posted 17 May 2017 My Price 4.00

The above figure shows the payoff to two airlines

I know the answer is d but I do not understand why if someone can explain to me why the answer is d. How does a $30 subsidy affect the route?

 

 

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?

 

a. Firm B is still better off not entering

 

b. Firm A will decide not to enter since firm B will.

 

c. Neither firm will have a dominant strategy.

 

d. Both firms will enter profitably.

 

hwk13_1(3).png

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SuperTutor
(15)
Status NEW Posted 17 May 2017 02:05 AM My Price 4.00

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