--%>
Assignment Help - homework help

Market Economy

Explain the statement "Hypothes is the basic short run and long run behaviors of the airline industry in a market economy".

E

Expert

Verified

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.

   Related Questions in Macroeconomics

  • Q : Fiscal measures to accurate

    Describe the fiscal measures to accurate the condition of deficient demand and excess demand. Answer: Fiscal measures are the government’s budgetary policy th

    		•
  • Q : Consumer Surplus definition Can someone

    Can someone help me in finding out the right answer from the given options. The basic difference between the dollar amounts people would willingly to pay for a particular quantity of a good and the amounts that they do pay at a particular market price is termed as: (1

    		•
  • Q : Define the term Supply curve Define the

    Define the term Supply curve.

    		•
  • Q : Opportunity costs of consumption

    Individuals maximize the satisfaction whenever the marginal utilities of all goods are: (i) Precisely proportional to the consumer’s income. (ii) Maximized. (iii) Precisely proportional to the opportunity costs of consuming them. (iv) Equivalent

    		•
  • Q : What is Equilibrium quantity

    Equilibrium quantity: It is the quantity supplied and the quantity demanded at equilibrium price.

    		•
  • Q : Are government budget scarcities always

    ‘The country is at present in recession and this has led to worse tax revenue and high expenses. The effect is a huge deficit. The government decides to increase taxes and lower government expenses. Is this an excellent idea?’

    		•
  • Q : Marginal utility of good at its maximum

    Can someone help me in finding out the right answer from the given options. The consumer maximizes utility whenever the spending patterns cause: (1) Marginal utility of each and every good to be at its maximum value. (2) Marginal utilities of each and every goods cons

    		•
  • Q : State the Income Effect Can someone

    Can someone please help me in finding out the accurate answer from the following question. The Income effects are: (i) Adjustments people make since the purchasing power of the given income is modified whenever prices change. (ii) Adjustments people make since the pur

    		•
  • Q : Problem on slope of demand curve The

    The demand curve for DVD games is a straight line, therefore its slope: (1) Is constant, although price elasticity of demand drops/falls as output increases. (2) Price elasticity are both stable. (3) Is constant, although price elasticity of demand increases as the pr

    		•
  • Q : Define Depreciation Depreciation of a

    Depreciation of a currency signifies fall in value of domestic currency in terms of foreign currency. Illustration: When value of rupee in terms of US dollars falls, state from Rs. 45 to Rs. 50 per dollar, it will be a condition of depreciation of Ind

    		•