IMO B
Premise:
Some airlines allegedly reduce fares on certain routes to a level at which they lose money, in order to drive competitors off those routes.
Conclusion:
However, this method of eliminating competition cannot be profitable in the long run.
Argument:
Once an airline successfully implements this method (reduces prices to loss), any attempt to recoup the earlier losses by charging high fares on that route for an extended period would only provide airline increases fares competitors with a better opportunity to undercut the airline's fares. competitors decrease theirs.
Argument weakens if competition cannot make money by undercutting fares.
Which of the following, if true, most seriously weakens the argument?
A) In some countries it is not illegal for a company to drive away competitors by selling a product below cost. This does not forward the argument. It just legalizes the method of driving away competition.
B) Airline executives generally believe that a company that once underpriced its fares to drive away competitors is very likely to do so again if new competitors emerge. If competition comes with better prices, I can also reduce my prices (I have successfully done that earlier. Hence, competition cannot take advantage of price-cut in my market)
C) As part of promotions designed to attract new customers, airlines sometimes reduce their ticket prices to below an economically sustainable level. This is a repeat of premise.
D) On deciding to stop serving particular routes, most airlines shift resources to other routes rather than reduce the size of their operations. Not clear which resources (infrastructural, human etc.).
E) When airlines dramatically reduce their fares on a particular route, the total number of air passengers on that route increases greatly. If this happens, it is a good market to serve for the airline as well as the competitors, provided they have the capacity to meet the scale.