Country airline Regional Express (Rex) has accused Qantas of predatory behaviour by launching flights on some of its monopoly routes and has threatened to cut off air services to some regional towns in response. Rex's deputy chairman John Sharp said yesterday that Qantas was trying to weaken the smaller airline in the hope of making it a 'less formidable competitor'... 'Qantas has clearly embarked on a deliberate strategy of moving into Rex's routes that can only support one regional carrier in an attempt to intimidate and damage Rex in its traditional regional market', Mr Sharp said yesterday in a statement released to the ASX... Since the start of the COVID-19 pandemic, Qantas has launched, or is planning to launch, on eight routes where Rex previously had a monopoly...

a] (2 points) Use the model of a firm with market power to analyse how the entry of a new firm (Qantas) to what was previously a market with only one supplier (Rex) will affect profitability of the existing supplier?

b] (1 point) Is it credible that Rex would 'cut off air services to some regional towns' in response to entry to those markets by Qantas?