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If We Seek to Explain the Number of Seats Sold

question 6

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If we seek to explain the number of seats sold on a particular air route, say Toronto to Halifax, over a one- year period, we would consider many variables. Which of the following variables would be endogenous to our theory?


Definitions:

Substitution Effect

The change in consumption patterns due to a price change that makes one good more economically attractive than its alternatives.

Output Effect

Output Effect is the impact on total production or output when a firm adjusts its resources, such as labor or capital, in response to changes in market conditions.

Substitute Resource

A resource or product that can be used in place of another to fulfill a similar function or need.

Marginal Revenue Product Curve

A graphical representation showing how the revenue generated from selling an additional unit of a good or service changes as more units are produced.

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