Question Two (worth five points A manager of an airline who schedules flights is

Question

Question Two (worth five points A manager of an airline who schedules flights is trying to determine the optimal pricing policy. Someone has prepared the following memo (take the numbers used as being accurate). "Flying a 200-seat plane across the country costs $100,000. Therefore, the average cost per passenger is equal to $500. Based upon these numbers, someone claims that an airline, interested in maximizing its profits or minimizing its losses, should never charge less than $500 for a ticket." Tell me if you believe this claim is correct? Explain your reasoning. What economic principle from the reading entitled "Thinking Like an Economists" are you using in answering this question? Be specific. Question Three (worth fifteen points) Assume that there are two producers-Producer A and Producer B. Assume Producer A is in the u.s. and Producer B is in Mexico. Each producer can either produce laptop computers or HD televisions. Assume that Producer A can produce 2 HD televisions in one hour and can produce 20 laptop computers in one hour. Assume that Producer B can produce 1 HD television in one hour and can produce 2 laptop computers in one hour (a) Who has an absolute advantage in producing televisions? Who has an absolute advantage in producing HD televisions? Define the term absolute advantage and show your calculations. (b) Who has a comparative advantage in producing computers? Show all your work. Who has a comparative advantage in producing HD televisions? Show all your work.

Explanation / Answer

Questions Two)

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.