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advance aviation economics




Question;1. Define the short-run and long-run and provide an;aviation example.;2. In the short-run, Airbus manufactures aircraft at its;existing factories, however, labor and other inputs such as those components;purchased from suppliers (engines are one example) are variable. Airbus has;received a substantial number of new orders and will increase its monthly;aircraft production rate. Explain why the MPL will decrease above;some level of labor as more workers are added. How does this decrease in MPL;result in an increase in MC?;3. The table shows the marginal product of labor for a;manufacturing firm in the short-run. The cost of an additional worker is $100;per day including benefits. The product sells for $2 per unit. Compute the;value of the marginal product of labor. How many workers will the firm;hire?;Labor (L);MPL;VMPL;0;1;74;2;168;3;238;4;284;5;306;6;304;7;278;8;228;9;154;10;56;11;-66;4. NEW DELHI -- Each fall at harvest time, Leela Dhar;Rajput used to hire 25 farm hands to work from dawn to dusk every day for a;week bringing in the rice crop on his 20 acres of land in the central Indian;state of Madhya Pradesh. This year, he plans to use a combine harvester;instead. With the machine and the help of two or three men, he expects to;finish the job in a single day. Indian agriculture is belatedly engaged in a;mechanical revolution, boosting productivity in a sector that has long relied;on cheap, surplus labor to tend crops in the world's second most populous;country. Job opportunities in factories and services, plus the government's;rural job-creation program guaranteeing 100 days of employment a year on;public-works projects, have drained the pool of workers in villages. "I;just can't find enough people to do the hard work in the fields anymore,;says Mr. Rajput. [Mukherji, B. (2013, October 29). India's Farmers Mechanize. WSJ;B8.];Show;and label the amount of capital (K) and labor (L) employed with the displayed;isocost line and then insert a new isocost reflecting a substantial increase in;the price of labor. Mr. Rajput intends to harvest the same quantity of rice as;last year. Show and explain the effect on the K and L employed.;K;L;5. Complete the table (the easiest method is to do the;computation in MS Excel). Create a line graph of AFC, AVC, ATC, and MC (in;Excel, select the 4 columns, then Insert/Line, and choose the first graph;option). Explain the reason for the shape of each curve. The completed table and graph can be copied;and pasted into this document. Hint: Be;certain that your line graph looks similar to those in Baye (your graph will;not be as smooth as in Baye). If not, there is likely an error in your;computations.;Q;FC;VC;TC;AFC;AVC;ATC;MC;0;$10,000;100;$200;200;125;300;133.34;400;150;500;200;600;250;6. Define economies of scale. Is there evidence of;economies of scale in the airline industry?;(Hint: Consider;Low-Cost-Carriers). In large commercial aircraft manufacturing?


Paper#56167 | Written in 18-Jul-2015

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