DOJ investigation prompts lawsuits alleging that airlines are fixing airfares It is alleged that Southwest, American, Delta,

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DOJ investigation prompts lawsuits alleging that airlines are fixing airfares It is alleged that Southwest, American, Delta, and United Airlines have been colluding to limit the increases in their capacity with the intent of increasing airfares. The airlines say the allegations are without merit. The airline industry is highly competitive with more people flying than ever before.

Explain how limiting the increase in capacity could lead to greater profit for the airlines, smaller consumer surplus, and deadweight loss. Illustrate your explanation with a graph.

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Foundations Of Economics

ISBN: 9780135897478

9th Edition

Authors: Robin Bade, Michael Parkin

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