Homework Question on Air Transport Economics & Finance
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Review the following videos that may help you understand the information in the textbook:
- ATE: Explain what is meant by “opportunity cost” and give an example in aviation? [5-points] Click here to enter text.
- ATE: What are some of the issues that complicates things when an industry such as aviation is regulated by the government? Discuss this from an economic regulation and not safety as outlined in the textbook. [5-points] Click here to enter text.
- ATE: What is the difference between “microeconomics” and “macroeconomics”? [10-points] Click here to enter text.
- ATE: Explain what is meant by the “price elasticity of demand.” Give an aviation example of a product with “inelastic” and “elastic” demands. [10-points] Click here to enter text.
- ATE: Very briefly define the law of supply and demand. [10-points] Click here to enter text.
- ATE: What factors influence the elasticity of demand for pilots. [5-points] Click here to enter text.
- ATE: What are some of the factors that affect the demand for short-haul and long-haul aircraft? Is there a difference in the factors that affect their demand?Please explain. [5-points] Click here to enter text.
- ATE: Explain derived demand and direct demand. Which of these two is the airline industry most characterized by? Please explain your answer. [5-points] Click here to enter text.
- ATE: With the recent decreases in Oil prices, what effects would this have on the aviation and air transportation industry? [5-points] Click here to enter text.
Homework Answer on Air Transport Economics & Finance
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- ATE: Explain what is meant by “opportunity cost” and give an example in aviation? [5-points] An opportunity cost is the foregone benefit or event that could yield profit. This happens when an entity has to make a choice between two alternative opportunities that are capable of yielding profit. The foregone choice is the cost an institution has to bear for settling on the alternative choice. An example of an opportunity cost in aviation involves abandoning one route in order to concentrates on another. Business activities associated and generated from operating within the abandoned route is the foregone opportunity.
2.ATE: What are some of the issues that complicates things when an industry such as aviation is regulated by the government? Discuss this from an economic regulation and not safety as outlined in the textbook. [5-points] When an aviation industry is regulated by government the following will happen. First, the aviation will not make timely decisions due to requirement for wide consultation. This may affect business in the sense that aviation industry requires timely decisions. Second, growth will be stunted. This means that government will take a lot of time to solve issues that may affect growth and development. Free market economies will also be hindered due to interference from the authority an action that is detrimental to growth.