Introduction To Air Transport Economics From Theory To Applications 2nd Edition Bijan Vasigh ,Ken Fleming - Solutions

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Once a week, Smith purchases a six-pack of cola and puts it in his refrigerator for his two children. He invariably discovers that all six cans are gone on the first day. Jones also purchases a six-pack of cola once a week for his two children but, unlike Smith, he tells them that each may drink no
Residents of your city are charged a fixed weekly fee of 6 for garbage collection. They are allowed to put out as many bins as they wish. The average household disposes of three bins of garbage per week under this plan. Now suppose that your city changes to a 'tag' system. Each bin to be collected
To earn extra money in the summer, you grow tomatoes and sell them at the farmers' market for 30 cents per kg. By adding compost to your garden, you can increase your yield as shown in the table below. If compost costs 50 cents per kg and your goal is to make as much money as possible, how many
The smallest amount for which you would be willing to wash someone else's car is 3.50. You are going out this evening, and your car is dirty. How much economic surplus would you receive from washing it?
The most you would be willing to pay for having a freshly washed car before going out on a date is
Is the non-refundable tuition payment you made to your university this year a sunk cost? How would your answer differ if your university were to offer a full tuition refund to any student who dropped out of school during the first two months of the semester?
Many people think of their air travel as being free when they use frequent-flyer coupons. Explain why these people are likely to make wasteful travel decisions.
Why might someone who is trying to decide whether to see a movie be more likely to focus on the 9 ticket price than on the 20 she would fail to earn by not babysitting?
True or false: Your willingness to drive to town to save 30 on a new appliance should depend on what fraction of the total selling price 30 is. Explain.
A friend of yours on the tennis team says: 'Private tennis lessons are definitely better than group lessons." Explain what you think he means by this statement. Then use the Cost-Benefit Principle to explain why private lessons are not neces- sarily the best choice for everyone.
What are the likely trends in future economic growth? (E. 18)
How do population demographics relate to the sovereign debt crisis and future economic growth? (E. 18)
What are the key spending programs driving the impending crisis in government sovereign debt? (E. 18)
Why might eynesian policy fail, or even make things worse? (E. 18)
According to eynesian theory, what should fiscal policy be if the economy is in recession? In an unsustainable growth spurt with rising inflation? In a time of normal growth? (E. 18)
At the equilibrium wage there is full employment, though some people are unemployed. Explain. (E. 18)
Summarize the various ways inflation can harm an economy. (E. 18)
Suppose a government raises tax rates in order to redistribute income. How would this likely impact economic growth? (E. 18)
What are three possible ways a central bank could increase the money supply? (E. 18)
Explain the difference between real and nominal variables. (E. 18)
What impact does the use of modern technologies such as jet engines, fly by wire programs, and flight simulators have on commercial aviation? (E. 18)
Has the Airline Deregulation Act of 1978 improved airline safety? (E. 18)
Which is the safest airline to fly? (E. 18)
Who regulates the airline industry? What is the difference between the FAA and the EASA? (E. 18)
Evaluate the often heard statement that “airline safety must be preserved at any cost”from an economic cost-benefit perspective. (E. 18)
Explain how passengers and employees are able to influence the safety practices of an airline. (E. 18)
Explain how safety regulation may increase overall safety for travelers. (E. 18)
Over the past several decades, both the fatalities per million aircraft miles and accidents per million aircraft departures have decreased. Briefly explain some of the reasons for these improvements in aviation safety. (E. 18)
What are the most common causes for airline accidents? (E. 18)
What are some of the incentives for airlines to continuously improve safety? (E. 18)
In the last 30 years there has been a surge in the low-cost market. Do you see any possibility for creation of airline alliances among CCs? Explain you answer.
How can legacy airlines grapple with low-cost competition?
What are the challenges and problems faced by CCs to expand into international markets?
Describe some of the differences of basic no-frills service between CC carriers in the US and those in Europe.
You are a manager at a low-cost airline planning to serve Charleroi Airport. Your airline has the option of serving Brussels Airport International Airport, the main airport serving the Belgium, or Charleroi Airport, a secondary airport. Brussels Airport is served by all of the major legacy,
ist three revenue management fences that airlines typically use to practice price discrimination and briefly explain how each one works.
What is the main problem with average cost pricing?
ist the conditions that are needed for successful price discrimination.
A major hotel offers 20 percent discounts for renting a room for more than three days. Therefore, in this case, the price paid by a traveler will be much lower than that of another traveler who stays less than three days. Is this an example of price discrimination? Why or why not?
What is meant by the terms “reservation price” and “consumer’s surplus” and how are these concepts related to price discrimination?
DirectJet is a small regional airline based in the northern Europe. It operates a small number of jet aircraft and could initially produce only 400,000 ASM per day. However, the output rate picked up as soon as management learned to schedule their flights more efficiently, save turnaround time on
Quantico Australian Airlines faces the following annual demand function for its os Angeles–Sydney route:Q(p) = 38,658.235 – 8.667 P Where Q is the number of tickets sold, and P is the average ticket price. The regression analysis also produced the following statistics: coefficient of
EZjET, a small regional airline, wishes to predict sales for its business travelers between two cities for the year 2014. It has recorded data for its past 14 years’ demand, and has obtained information on the number of businesses within its market area.This information is listed in the table:a
Write the demand equation, in a general form, for an airline and identify the following terms:a Dependent variable b Independent variables c Y-intercept d Slope ogically, one can often expect a multi-collinearity effect between the independent variables in a regression model. Which variables in
ist about ten questions you would ask a group of passengers in order to estimate their demand function for a specific airline and a specific route.
Formulate a multiple regression model showing how the quantity demanded of an airline depends on the ticket price, the income of passengers, and the ticket price of other airlines operating in the same market. What are the anticipated signs of the coefficients?
In a regression analysis how would you incorporate seasonal variations and other important events (shock) like September 11 and such?
If a regression analysis had a R2 of .89, what does this mean?
Explain the difference between seasonal and cyclical variations. ive an example of how airlines respond to seasonal variations.
Calculate the change in the HHI for the period of 2006–2012:a US airline industry.b US major airports.c Have these industries become more or less concentrated over time?
Suppose that a typical monopolistically competitive firm faces the following demand and total cost equations for its product:Q = 50 – P TC = 375 – 25Q + 1.5Q2 a Where P is the price of the product and Q is the number of units produced.b What is the firm’s profit-maximizing price and output
Assume that there are only two airlines serving an airport each with the MC of $40.The market demand curve at this airport is MR = 160 – Q.a Supposing they perform as Cournot oligopolists, determine the price and total airlines outputs.b Compare with the result under pure monopoly and perfect
South Charleroi Airport is a regional airport serving leisure travel market. The inverse demand curve for this airport is P = 150 – Q. Assume that there are only two airlines serving this airport, each with the identical marginal cost (MC) of $30.a Supposing they perform as Cournot oligopolists,
raphically depict a shut-down case for a monopolistic competitive firm. When should any firm shut down in the short run?
You are the manager for DirectJet and unable to determine whether any given passenger is a business or leisure traveler. Can you think of a self-correction mechanism that would permit you to identify business and night leisure?
If monopolies are socially undesirable why does a government actually support having some?
Suppose you are the manager of Navas, a major FBO, exclusively serving general aviation aircraft. Based on the estimates provided by a consultant, you know that the relevant demand and cost functions for your product are:Q = 25 – 0.5P TC = 50 + 2Q a What is the FBO’s inverse demand function?b
E is the only producer of new jet engines for general aviation aircraft. Demand for a single engine is P = 2,000,000 – Q while the MCs of producing an engine are: MC =1,999 Q.a What would be the monopoly price and quantity of these engines?b What economic profit would E earn on the sale of these
Assume a firm is operating under perfect competition with the following total cost and demand curves:a Find equilibrium price, and quantity.b Is the firm making a profit or loss?c Is this a long-run or short-run equilibrium?
Is it true that a monopoly can charge any price and customers will still have to buy the product? Do you agree or disagree? Why?
Why is aviation particularly suited to open skies agreements and what are some gains for individual airlines in such agreements?
How were CCs in Europe affected by the EU open skies agreement?
How did the open skies agreement between the EU and the US reduce the barriers to entry?
Define Cabotage aw and explain the impact of cabotage agreements on international travel.
While global alliances have benefits for travelers and airlines, there are some negative concerns. Identify and describe some of the costs associated with joining a global alliance.
lobal airline alliances were created with the intention of growing the networks of airlines and providing greater access to more parts of the world. Recently, three major global alliances started to accept smaller, regional airlines to join ranks. What are the benefits to the alliance of the
ist and briefly explain the eight provisions of open skies agreements.
enerally speaking, what happens to the value of a country’s currency when imports exceed exports and how, in terms of supply and demand, does this take place?
Now assume that Country A takes 100 hours to produce 20 aircraft or ten jet engines and Country B takes 100 hours to produce 15 aircraft or five jet engines. Which country has an absolute advantage in which product? Does either country have a comparative advantage in one of the products? If so,
Consider the following situation: Country A takes 50 hours to produce ten aircraft or five jet engines. Country B takes 50 hours to produce five aircraft or ten jet engines.Which country has an absolute advantage in which product? What are the domestic terms of trade for each country? Draw the
What are some of the benefits of privatization that are mentioned in the chapter?
In what ways are the effects of the regulatory delay tax discussed in the chapter more burdensome than an ordinary tax?
Suppose the cost function is given by:C = 50 + 4Q + 2Q2• What is the AFC of producing five units of output?a What is the AVC of producing five units of output?b What is the ATC of producing 5 units of output?c What is the MC of producing five units of output?d What is the AFC function?e What is
Calculate BF for the following airlines: US Airlines, 2010 Airlines Yield CASM BLF 1 American 14.09 12.84 ? 2 Continental 14.96 11.48 ? 3 Delta 13.07 11.84 ? 4 United Airlines 15.15 12.03 ? 5 US Airways 11.68 11.73 ? 9 Southwest Airlines 10.66 11.27 ? 7 JetBlue 11.75 9.77 ? 00 8 AirTran 9.71 10.35
Why it is important that an airline manager consider opportunity costs when making economic decisions regarding the airline?
For many airlines in the short run, a major portion of the cost of production such as aircraft and terminal space are fixed. Should these very large FCs be ignored when the revenue managers are making output and pricing decisions? Why?
Please provide one particular industry as an example to illustrate that MC is U-shaped.
Please provide one particular industry as an example to illustrate that MC is not U-shaped.
The Jeto Company is a major fixed-base operator (FBO) at a regional airport.Management estimates that the demand for the jet fuel is given by the equation:QJF = 10,000-2,000PJF + 0.2Y + 200 P Where:• QJF is demand for jet fuel in thousands of gallons per year;• JF is the price of jet fuel in
Assume your demand and cost functions are the following:Q = 100 – 0.50P and TC(Q) = 104 – 14Q + Q2 a Find the inverse demand function for your firm’s product.b What price you should charge if you are planning to sell five units?c Calculate your total cost.
With the recent increase in decrease in jet fuel prices, what kind of effects should we see in the air transport market?
Suppose an airline increases its average ticket price from JF to CD from $435 to$515, and consequently the number of seats sold drops from 800 to 735:a What is the price elasticity of demand for this market?b Is the demand elastic, unitary elastic, or inelastic in this price range?c What is the
Suppose JetBlue raises the ticket price by 6 percent and the ASM decreases by 3 percent. Is the price elasticity of supply elastic, unit elastic, or inelastic? Why?
With changes in fuel prices what kind of effects should we see in the market for air travel?
Suppose the income elasticity of demand for a good is -4. Is this good a normal good or an inferior good? If it is a normal good, then is it a luxury or a necessity? Why?
What are the factors that influence the elasticity of demand for pilots?
Is the price elasticity of demand for airline industry in short-haul markets more or less than long-haul markets? Why?
Define the law of demand and supply. Explain the difference between demand and quantity demanded. ive an example for the airline industry and show it graphically.
What is the price elasticity of demand? Please provide some examples of products that have elastic, and those with inelastic demands, and explain your reasoning.
ist two types of perceived market failures.
What are the main differences between micro and macroeconomics?
ive a standard definition of the science of economics.
Explain what the concept of opportunity cost means in economics.
Mergers have been an important part of the airline industry. Have they been successful?
What are some trends with respect to consolidation in the industry? At airports? How is this demonstrated in the HHI?
What are the top five busiest airports in terms of passengers? International Passengers?Cargo?
Does regional aviation activity reflect in average age of aircraft by region?
Which regions serve the largest number of passengers? Movements? Cargo?
What are direct and indirect economic impacts related to air transportation and how do they differ? Provide an example of each.
The Airline Deregulation Act of 1978 practically removed government control over fares, routes and market entry from commercial aviation.a Identify some of the characteristics of the US airline industry before de-regulation.b How did this era affect airlines and passengers?c Was deregulation

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Introduction To Air Transport Economics From Theory To Applications 2nd Edition Bijan Vasigh ,Ken Fleming - Solutions

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