-In Exhibit L-5, if Southwest knows that Delta is planning to charge a high price, in the short run it should
A) charge a low price and increase output
B) charge a high price and decrease output
C) exit the market
D) wait until it discovers what happens to market share
E) cut back on output regardless of price

Question

-In Exhibit L-5, if Southwest knows that Delta is planning to charge a high price, in the short run it should
A) charge a low price and increase output 
B) charge a high price and decrease output 
C) exit the market 
D) wait until it discovers what happens to market share 
E) cut back on output regardless of price

Quizplus · Accepted Answer

If Delta charges a high price, Southwest can capitalize by charging a low price to attract more customers and increase its market share, thus increasing output in the short run.

-In Exhibit L-5, If Southwest Knows That Delta Is Planning