Answered: Imagine United Airlines deciding…

Imagine United Airlines deciding independently to reduce fares on its flights. Other competing airlines quickly matched the fare cuts. These actions might be interpreted as:

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 7MC

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Concept explainers

Product and Price Bundling

Product and price bundling is used as a marketing strategy by businesses, where complementary products and services are combined and sold as a package deal. This bundled price is usually less than the total price of the individual products if they were to be sold separately. When bundled and sold, each product is sold at a reduced price. Using a price bundling strategy helps increase the average revenue per user and also increases the engagement with the user. This happens as the perceived value of the bundled products is more than the individual products.

Question

Imagine United Airlines deciding independently to reduce fares on its flights. Other competing
airlines quickly matched the fare cuts. These actions might be interpreted as:
a cooperative game.
a competitive game.
a constant sum game.
a noncooperative game.

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