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business
principles of economics

Questions and Answers of Principles Of Economics

What are the most common causes of airline accidents?
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
Explain how safety regulations may increase overall safety for travelers.
Explain how passengers and employees are able to influence the safety practices of an airline.
From an economic cost-benefit perspective, evaluate the often-heard statement that “airline safety must be preserved at any cost.”
Who regulates the airline industry? What is the difference between the FAA and the EASA?
Which is the safest airline to fly?
Has the Airline Deregulation Act of 1978 improved airline safety?
What impact does the use of modern technologies such as jet engines, fly-bywire programs, and flight simulators have on commercial aviation?
How do aircraft manufacturers ensure that their planes meet safety standards and requirements?
Explain why it is particularly important to understand the international aspects of the aviation industry.
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
Now assume that Country A takes 100 hours to produce 20 aircraft, or 10 jet engines and Country B takes 100 hours to produce 15 aircraft or five jet engines. Which country has an absolute advantage
Why do nations trade? Briefly explain the arguments for and against free trade.
Name and describe the rationale behind the three types of barriers to trade that a country may impose.
How have the effects of free trade impacted the aviation industry?
Generally 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?
Explain why it is often said that trade is always good, but not always good for everybody.
Assume that the domestic demand for a certain product is equal to P = 1,000 − 5Q. Assume further that the domestic supply for the same product is equal to P = 500 + 5Q. With free trade, the supply
Using the numbers given in the preceding problem, how much does the domestic government gain from the tariff? How much do the domestic suppliers gain because of the tariff? How much do domestic
What do you conclude about the gains from trade when you compare the sum of producer surplus and government gain to the loss of consumer surplus?
Now suppose that instead of the tariff, an import quota is imposed on the product. Assume that the original supply and demand curves with free trade are P= 1,000 − 5Q for demand and 400 + 5Q for
What is the difference between a production possibilities curve that has a convex shape versus a production possibilities curve that is a straight line?
What is the difference between a free-floating currency and a pegged exchange rate?
What are the different types of barriers to international trade, and how do they affect global trade patterns?
If United States can produce 500 aircraft with 1,000 units of cars, while Japan can produce 600 aircraft with 1,500 units cars, which country has an absolute advantage in the production of aircraft?
List and briefly explain the eight provisions of Open Skies agreements.
Global 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
Identify and describe some of the costs associated with joining a global alliance.
Define Cabotage Law and explain the impact of cabotage agreements on international travel.
How did the Open Skies agreement between the European Union and the United States reduce the barriers to entry?
How were LCCs in Europe affected by the EU Open Skies agreement?
What are the main provisions of Open Skies agreements and why have some countries avoided such agreements?
Which freedom is not likely to be extended to foreign airlines and why?
Name the three major world alliances. What are some of the benefits and costs associated with these alliances?
Why is aviation particularly well suited to Open Skies agreements, and what are the potential gains for individual airlines?
Why do legacy airlines have an advantage over LCCs in the international market?
What is a joint venture between airlines?
Explain why airlines originally formed alliances with foreign carriers.
What are code share agreements between airlines?
What are some of the pros and cons of equity investments between airlines?
What are the major trends in global alliances?
Which airport has the greatest concentration of a single global alliance network?
How does this affect traffic (domestic vs international) at the airport?
Briefly summarize the future for global alliances?
In what sense can it be said that the government controls the means of production for the airline industry?
In what ways are the effects of the regulatory delay tax more burdensome than the effects of an ordinary tax?
Why can it generally be assumed that the supply curve for the airline industry is relatively inelastic?
What are some of the benefits of airport and ATC privatization?
What are some of the ways in which the effects of an airport monopoly might be countered in the marketplace?
Assume that the airport is a monopoly and has negligible costs associated with landing aircraft.a. Calculate the price that could be charged with this demand for the airport to maximize revenue.b.
What are some of the problems associated with air traffic control commercialization?
If the supply of air travel is relatively inelastic, then who will bear the greater cost of congestion delay, the passengers, or the airlines?
What will be the long-term effects of continued congestion delay on the airline industry?
Explain how congestion pricing would alter traffic flow at an airport.
How has the historical development of air traffic control contributed to the point-to-point navigation that now exists?
Why might the air traffic control union oppose fully automated air traffic control?
Why might airlines that already had intercontinental route and slot positions oppose a more open navigation regime provided by satellite control?
What tends to happen over time to the regulating agency in a regulated industry?
List some reasons why the airlines might desire commercial air traffic control.
Would congestion pricing completely do away with delay at busy airports?
What greenhouse gases are produced by aircraft engines?
Is it the stock or the flow of CO2 emissions that is more important for climate impacts?
How do aircraft condensation trails impact the climate?
What are the consequences of a limited “carbon budget” on air transport?
Describe the shape and consequences of aviation’s CO2 marginal abatement cost curve.
Is a command-and-control regulation or a market-based instrument better for controlling air transport CO2 emissions?
Why is an Emissions Trading Scheme cheaper for air transport than a command-and-control regulation?
In which way are a carbon tax and an ETS equivalent policy instruments?
What has been the experience of governments introducing market-based instruments?
Why is there policy pressure for air transport to decarbonize further than under a market-based instrument?
Why might biofuels not be Sustainable Aviation Fuels?
If SAF costs twice as much as Jet Kerosene to produce, what will be the consequence of the EU’s mandates?
Compare and contrast the US and the EU approaches to stimulating SAF production.
What will air transport look like in a world that achieves net zero CO2 emissions?
What is the difference between the way the EU and the DOT evaluate the grant of antitrust immunity?

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