Question

Using real world example, list and explain what you believe to be the main sources of
economies of scale in the airline industry. (250 words please).

Answer 1

u.sing veal wortd example, ist and explaun n economies scale in e airline industry ou beueve to be Hhe mcin sources Scale Economies scale o^tem oviginate with bix ed size or"spee еБъ i ciently increasing ω1t-h £conomies Scale'- e.re are Seueral 1eason returns to scal e Dccur. Firsl tecies that are cost-eộtective nif devel ob 1oduction aener S output m cachineT hawe used r cuttinq an d star bodies » Ceometric TeJaions o1e onother factor causin d «creasing auerae cost. A las compant usin valume per squaie inch Justibx 2 4- inch pipe oill hcwe 2,-ihp pipe whue a trm toith output subicient te pipe häs 3 Cubic inches e Suikace ntneS valume per square jnch The yeduced cost per unit pipe volume occurs because emakerial Teguer ement varies wih the cia meter

klhile he volume varies uoith square h e radius ot the Pipe Thus he lara e L e pipeline oi hev u aubo and inventor As a H'm becomes datg er, e dem and bein concentrate eorninq au uhe aspects occuss becauje that manag ement can no! e63とchịu