An airline industry study recently reported, "Evidence is abundant that larger firms are not more efficient or less costly simply because they are larger. In fact, other things equal, the largest carriers tend to have a higher level of unit costs, possibly caused by the difficulties of managing an airline of large size." This means that
a. there are increasing returns to scale in the airline industry.
b. the airline industry has constant returns to scale.
c. the larger airlines are not profitable.
d. airlines are experiencing decreasing returns to scale.
d
You might also like to view...
If an indifference curve were concave instead of convex to the origin, what implication would that have if the consumer reduces consumption of one good but still wants to enjoy the same level of utility in a two-good world?
What will be an ideal response?
An increase in demand for French fries will cause equilibrium wage rates:
a. and quantities of potato workers hired to rise. b. and quantities of potato workers hired to fall. c. to rise and quantities of potato workers hired to fall. d. to fall and quantities of potato workers hired to rise. e. and quantities of potato workers hired to stay the same.
A head tax is
a. a tax in the form of a percentage of the value of the good taxed b. a fixed tax in the form of cents or dollars per unit of the good c. a sales tax applied to a foreign good d. any tax levied on a good e. the same as a poll tax
Ceteris paribus, if the demand for gasoline is relatively inelastic, and the government decides to place a tax on it, there should be a relatively ________ price hike to eliminate the excess ________ caused by the tax.
A. large; supply B. large; demand C. small; supply D. small; demand