Essay
In a past fare war, U.S.Air reduced the price of its Charlotte, North Carolina, to New York City round-trip fare from $198 to $138 to match American Airlines.U.S.Air did so reluctantly, saying it would cost the company millions of dollars in revenue.American, on the other hand, believed the fare cut would increase its revenue.What different assumptions about the underlying price elasticity of demand did each airline believe true?
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U.S.Air must have believed demand in thi...View Answer
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