Economy
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Scenario 1:
If I had been hired as an economic consultant to evaluate the nations airport security systems, I would explain at least the following questions in my evaluation:
A) The feasibility of this system regarding the extra cost to the consumer: These security systems add another $5 to the cost of the airplane ticket. But in my opinion, this cost is justified. For the consumer who has purchased an airplane ticket, this is simply another added cost that he should have no problem with. If a cost-benefit analysis is carried out, the benefits from such a security system are many and if these systems were not implemented, there is immense risk and danger associated with their non-existence. Any person can board a plan carrying any weapons or metallic equipment which might not be a safe option. So, for the benefit of the passengers who can be assured of their safety, another $5 should not be such a huge cost.
B) The feasibility of this system regarding wastage of time: A passenger who intends to board a plan generally gets to the airport lounge knowing that security checks are time-consuming. The 10 minutes that it takes for each passenger to get himself pronounced secure (or not) by these systems does sometimes prove to be a hassle in times of rush, the holiday season, etc. If this time period could be shortened to 5 or 6 minutes, this would cease to be a problem (Boone & Kutrz, 1994).
Scenario 2:
Price Elasticity of Demand:
The Price Elasticity of Demand is a concept that measures how much the quantity demanded of a good changes when its price changes. Elasticity is analogous to responsiveness; a good is elastic when its quantity demanded responds greatly to price changes. Demands for goods vary in their elasticity. Demand for food generally responds little to price changes and is inelastic, while airline travel is highly price sensitive and is therefore elastic.
Its measurement is as follows:
Price elasticity of demand = E = percent increase in Q / percent decrease in P
When a 1 percent rise in price calls forth more than a 1 percent decline in quantity demanded, this is price elastic demand
When a percentage rise in price results in an equally