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[Solution Library] Consider now the situation of one of these firms in the short run. Suppose that the price cuts have no effect on ticket sales and that airlines

Question: Consider now the situation of one of these firms in the short run. Suppose that the price cuts have no effect on ticket sales and that airlines have only two costs: labor, which we wI11 assume is fixed in the short run, and fuel, which is assumed variable. Given the information provided about the relative size of these costs and about the size of the price cuts, will the profit maximizing firm continue to operate in the short run with these price cuts?.

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