As we will see later in the course, The Economist has alleged that U.S. airlines are colluding because even though marginal costs of airlines (i.e. fuel prices) have decreased, ticket prices haven’t fallen.
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Suppose all U.S. airlines were in fact monopolized (i.e. owned by a single firm) and that the marginal costs of that airline fell. What rule of monopoly pricing that we have developed predicts that even when a monopolist’s marginal costs fall, output increases and prices decrease? Get Business Law homework help today
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