Market Economy
Explain the statement "Hypothes is the basic short run and long run behaviors of the airline industry in a market economy".
Expert
Short run is the period where a fixed factor of production remains constant. The output or service can go high in small measures only. Entrepreneur cannot alter the fixed factors of production to his advantage. Investment and manpower cannot get increase in short period of time. Both business conditions and environment hamper business man to aim for greater production or service level. The average cost will be at competitive level with small output and given set of production factors. Hence any decision a business man takes in the short run will give only small increase in output or service at a given price. Airline business can also face similar situation where it cannot increase the service in short run. The tendency of the airline business in the short run is not to disturb the current level price as it can give only limited service without any expansion. Very often, in the short run, the business can operate only in short routes and destinations. It cannot increase the fleet of operations and cannot fly to longer destinations.
Long run decision and long run period denotes the situation where a business man can conveniently alter the factors of production to his advantage. Capital budgeting decisions are possible only in the long run. Airline business firm can increase the fleet of operation and travel destinations only in the long run. Passengers can get lot of benefit in the long run period. Price concessions and cost reduction will be possible in the long run. Passenger traffic and passenger amenities will be possible only in long run period. Innovation and novelty will be the unique feature in the long run situation. Sustainable development in the airline business is possible with the support of government policy. Government can also help both private and state airliners in the subsidies and financial assistance. It is hypothesized that airlines charge passenger fees direct to their customers. Protection of competition is essential to secure sustainable development.
What are the conditions through which the supply curve will shift?
A tax will be backward-shifted totally when the: (i) demand curve is vertical and the supply curve is slopes up. (ii) demand curve slopes down and the supply curve is vertical. (iii) supply curve is perfectly elastic and the demand cu
In poor countries people spend a big percentage of their income so that APC and MPC are high. Yet, the value of multiplier is low. Explain why?
Since the percentage of income paid in taxes generally declines as taxpayer income increases, standard sales taxes and “sin” taxes [for example, excise taxes upon liquor or tobacco] are illustrations of: (1) proportional t
When total revenue to a firm is unaffected by small price modifications, then demand is: (i) Relatively price elastic. (ii) Relatively price inelastic. (iii) Unitarily price elastic. (iv) Vertical. (v) Horizontal. Can someone help
What is the difference among the discount rate, prime rate and the subprime rates of interest? Which interest rate in particular build the 2008 recession? Explain how that happened.
Whenever longer periods are considered and hence bigger ranges of adjustments (that is, substitutions) become probable, demand curves tend to become: (i) Flatter, and therefore do supply curves. (ii) Flatter, as supply curves become steeper. (iii) Ste
When in an economy intended investment is more than intended savings, then what is the consequence of it on the national income? Answer: When I > S, the level of
Define fiscal policy? Answer: Fiscal policy is the revenue and expenditure policy of government with a view to combat the state of inflationary or deflationary gap
Macroeconomic theory would be least related in analyzing the results of: (w) optional ways of funding deficits in international trade. (x) U.S. federal budget deficits. (y) consumer items purchased through middle-income families. (z) deficit spending through the United Nations.
18,76,764
1927314 Asked
3,689
Active Tutors
1420426
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!