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Sample Assignment on Microeconomics

   

Added on  2021-06-17

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Running head: MICROECONOMICSMicroeconomicsName of the studentName of the universityAuthor Note
Sample Assignment on Microeconomics_1

1MICROECONOMICSLACCostOutputC1C2OQ1Q2Answer:The Singapore Airlines (SIA) has bought Boeing 787-10 to obtain a significantmarket position within the airline industry. From economic perspective, it can be said that theSIA is operating under monopoly market in this country, as no other airline companies havebought this new model of Boeing (Australianaviation.com.au, 2018). In this context, theairline company is experiencing natural monopoly due to its higher amount of fixed cost(Borenstein, 2016).On the other side, economies of scale refer the situation when the long-run averagecosts are starting to decline when it operates under large-scale production system (Baumers etal., 2016). This can be described with the help of following diagram.Figure 1: Economies of scaleSource: (created by author)Figure 1 has represented the economies of scale for a company. To produce Q1 unit ofoutput, the company bears C1 amount of cost. However, the amount of cost can decrease byC1C2 unit if the company has increased its output by Q1Q2 unit.This concept of economics has also operated within the concerned airlines company.For an aircraft, number of output is its total number of seat available for passengers and alsoavailability of tickets. To buy this new model of Boeing aircraft, the company has incurred
Sample Assignment on Microeconomics_2

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