Question

Operating in the southwestern states. Lancer Airlines hopes to avoid entering the price war that currently is taking place between several airlines on the east coast. The best strategy to avoid severe price competition is to:
A. reduce flights and in-flight services, and layoff employees.
B. provide frequent travelers the added value of special fringe benefits.
C. cut costs and services in order to maintain profit margins.
D. determine the breakeven price and charge slightly more than that.

Answer 1

Answer:

The correct answer is (B)

Explanation:

Firms and organisations try to attract the best talent by offering them fringe benefits. To compete in perfect competition, firms are usually the price takers, and it is difficult to cut cost. Lancer airline can offer its customers fringe benefits.  Extra benefits and incentives will attract more customers and will ultimately help the company to gain more revenue and a competitive edge over competitors.