If an Airport Decides to Expand by Building an Additional

question 208

Multiple Choice

If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, then the expansion would provide ________ to the airlines.

• A)economies of scale
• B)diseconomies of scale
• C)higher average costs but lower total costs
• D)higher marginal costs but lower total costs

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Definitions:

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price.

Demand Equation

A mathematical representation that describes the relationship between the quantity of a good or service demanded and its price, along with other factors like income and prices of related goods.

Supply Equation

A mathematical representation of the relationship between the quantity of a good supplied by producers based on various factors, including price.

Price Ceiling

A legal maximum price set by the government for a particular good or service, aimed at preventing prices from reaching excessively high levels.