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-The Above Figure Shows the Payoff to Two Airlines,A and B,of

Question 1

Multiple Choice

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,and the government imposes a $20 per firm tax on firms that service this route,which of the following maximizes the firms' joint profits? A) Neither firm services the route. B) Firm A offers firm B $20 to not enter. C) Both firms will service this route. D) Firm B offers firm A $30 to not enter.
-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,and the government imposes a $20 per firm tax on firms that service this route,which of the following maximizes the firms' joint profits?


A) Neither firm services the route.
B) Firm A offers firm B $20 to not enter.
C) Both firms will service this route.
D) Firm B offers firm A $30 to not enter.

Correct Answer:

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