An Airport Is Located Next to a Housing Development

question 28

Multiple Choice

An airport is located next to a housing development.Where X is the number of planes that land per day and Y is the number of houses in the housing development, profits of the airport are 28X - X² and profits of the developer are 20Y - Y² - XY.Let H₁ be the number of houses built if a single profit-maximizing company owns the airport and the housing development.Let H₂ be the number of houses built if the airport and the housing development are operated independently and the airport has to pay the developer the total "damages" XY done by the planes to the profits of the developer.

• A)H₁ = H₂ = 4.
• B)H₁ = 4 and H₂ = 10.
• C)H₁ = 10 and H₂ = 4.
• D)H₁ = 6 and H₂ = 9.
• E)H₁ = 9 and H₂ = 13.

---

Definitions:

Skill-Based Pay

Skill-based pay is a compensation system where employees are paid based on the range, depth, and types of skills and knowledge they possess, rather than their job title or position.

Flexibility

The quality of being adaptable or variable, especially the ability to respond to changes in circumstances or environments.

Productivity

The measure of efficiency in converting inputs into useful outputs, commonly used in analyzing the performance of businesses, economies, or individual workers.

Supervisory Costs

Expenses associated with overseeing and managing employees, including salaries of supervisors and costs related to training and supervising staff.