Reference no: EM131165634
Case study 3.3: The Texas state bird
Southwest Airlines is a major carrier based in Texas, and has made a strategy of cutting fares drastically on certain routes with large effects on air traffic in those markets. For example on the Burbank-Oakland route the entry of Southwest into the market caused average fares to fall by 48 per cent and increased market revenue from $21,327,008 to $47,064,782 annually. On the Kansas City-St Louis route, however, the average fare cut in the market when South west entered was 70 per cent and market revenue fell from an annual $66,201,553 to $33,101,514.
Questions
1 Calculate the PEDs for the Burbank-Oakland and Kansas City-St Louis routes.
2 Explain why the above market elasticities might not apply specifically to Southwest.
3 If Southwest does experience a highly elastic demand on the Burbank-Oakland route, what is the profit implication of this?
4 Explain why the fare reduction on the Kansas City-St Louis route may still be a profitable strategy for Southwest.
|
Provide a critical analysis of m and rs implementation
: Provide a critical analysis of M&R's implementation of the balanced scorecard, including an identification of the strengths and weaknesses of the program.
|
|
What is the purpose of risk treatment plans
: Identify three benefits an organisation gains from effective risk management. Discuss risk management strategies that lead to good corporate governance. Discuss one technique or tool that can be used to identify risk.
|
|
Assume two-country world with two factors of production
: Assume a two-country world with two factors of production (capital and labor) and two goods. In this context, state the Heckscher-Ohlin theorem. Then indicate the two definitions of relative factor abundance. In addition, spell out what is meant by t..
|
|
Only quantitative outcomes are relevant
: Only quantitative outcomes are relevant in capital budgeting analyses. - Do you agree or disagree? - Explain.
|
|
Calculate the peds for the burbank-oakland
: Explain why the fare reduction on the Kansas City-St Louis route may still be a profitable strategy for Southwest.
|
|
Respond the the written article with your opinion
: Respond the the written article with your opinion and cited work. From my personal experience with five hundred people payroll, I can tell that a lot of organizations look into payroll record, and it is extremely important to keep accurate journal ..
|
|
Describe market as being in equilibrium
: What are we saying when we describe a market as being "in equilibrium"? Changes in market conditions will always trigger one of two disequilibrium conditions. Describe one of them, and tell how the market would react to this disequilibrium.
|
|
What is the effect on total revenue
: Suppose a monopolist faces the demand relationship shown in the table below. If the firm is currently selling four units per day and wants to sell five units, what is the effect on total revenue
|
|
How might achieve these objectives under ifrs
: In order to achieve the same objective under US GAAP, would management have to structure the transaction in the same was as they would under IFRS?
|