How much revenue in the airline industry comes from business travelers compared to leisure travelers?

July 7, 2024 No Comments

A: Airlines receive about 60 percent of their revenue from consumers directly and the other 40 percent from selling frequent-flier miles to credit card companies, repairing aircraft and offering other services. Of consumer revenue, business travelers contribute more than leisure travelers. Business travelers account for

How must banks use the deposit multiplier when calculating their reserves?

July 7, 2024 No Comments

A: The maximum amount of checkable deposits a bank creates through loaning money cannot exceed the amount of the bank’s reserves multiplied by the deposit multiplier. The deposit multiplier is part of the money supply expansion activity by a bank made possible with fractional reserve

How reliable or accurate is marginal analysis?

July 7, 2024 No Comments

Marginal analysis is designed to show how economic reasoning allows actors to accomplish more by understanding limits on what can be accomplished. The focus of marginal analysis is on possible incremental adjustments in resource allocation. As the underlying technique in cost-benefit analysis, marginal analysis is

How strongly does government regulation impact the utilities sector?

July 7, 2024 No Comments

A: Government regulation dominates the utilities sector. The majority of all American consumers receive their utilities services from private companies that are regulated at the state level by public service commissions. Larger federal or state power utilities are run directly by the government, as are

How is covariance used in portfolio theory?

July 7, 2024 No Comments

A: Covariance is used in portfolio theory to determine what assets to include in the portfolio. Covariance is a statistical measure of the directional relationship between two asset prices. Portfolio theory uses this statistical measurement to reduce the overall risk for a portfolio. A positive

How successful have “dove” Federal Reserve heads been in the past when it comes to managing the economy?

July 7, 2024 No Comments

A: Until the financial crisis of 2007-2008, it seemed as though dovish chairs of the Federal Reserve had used monetary policy to effectively keep down unemployment without noticeable negative consequences. The “Great Moderation” ushered in by Alan Greenspan was an enormous success story, until the

How is marginal analysis used in making a managerial decision?

July 7, 2024 No Comments

A: Marginal analysis plays a crucial role in managerial economics, the study and application of economic concepts, to managerial decisions. The idea is to predict and measure the impact of per unit changes on an organization’s goals, ultimately identifying the optimal resource allocation given the

If left in place long term, what problems does protectionism cause for a country?

July 7, 2024 No Comments

A: In 1886, American free-trade advocate Henry George famously identified the problem of protectionism through an amusing analogy: “What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.” George poignantly identified

How is marginal revenue related to the marginal cost of production?

July 7, 2024 No Comments

A: The marginal cost of production and marginal revenue are economic measures used to determine the amount of output and the price per unit of a product that will maximize profits. A rational company always seeks to maximize its profit, and the relationship between marginal revenue

In economics, what is an index number?

July 7, 2024 No Comments

A: Economists often make comparisons between sets of data across time. For example, a macroeconomist might want to measure changes in the cost of living in the United States over a five-year period. This is where index numbers come in; they allow for easy, quick

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