As Southwest Airlines Began Operating at Various Airports Around the Country

question 151

Multiple Choice

As Southwest Airlines began operating at various airports around the country:

• A) prices at those airports decreased and the number of passengers using them increased dramatically.
• B) market power became more concentrated, leading to higher fares and fewer flights.
• C) consumer surplus and the deadweight loss increased.
• D) consumer surplus decreased and the deadweight loss increased.

Explain the difference between GDP and Gross National Product (GNP).

Identify what expenditures are included and excluded in GDP calculations.

Calculate GDP using different approaches and understand the concept of net exports.

Understand the impact of government transactions, transfer payments, and international trade on GDP.

---

Definitions:

Total Variable Cost

Total Variable Cost is the sum of all costs that vary directly with the level of production, such as materials and labor costs.

Purely Competitive Firm

A firm operating in a market where there are many sellers and buyers, products are identical, and there are no barriers to entry, leading to zero long-term economic profits.

Profit

The financial gain made in a transaction or operation, calculated as the difference between revenue and expenses.

Total Fixed Cost

The sum of all costs required to produce the first unit of a product which do not change with the volume of output.