Question

Three airlines – IA, JA and SA – operate on the Delhi-Mumbai route. To increase the number of seats sold, SA reduced its fares and this was emulated by IA and JA immediately. The general belief was that the volume of air travel between Delhi and Mumbai would increase as a result.
Which of the following, if true, would add credence to the general belief?

• A. Increase in profitability of the three airlines.
• B. Extension of the discount scheme to other routes.
• C. A study that shows that air travellers in India are price-conscious.
• D. A study that shows that as much as 80% of air travel in India is company-sponsored.

Hint:

Always consider how external factors such as consumer behavior can influence the outcomes of business decisions.

Answer 1

The Correct Option is C

The Correct Answer is (3). If air travelers are price-conscious, reducing fares would likely increase the volume of air travel between Delhi and Mumbai, thus supporting the belief.