' But as the economy wavers and technology enables businessmen and women to use virtual, rather than face-to-face meetings, focusing on either a low-end or high-end strategy is problematic. Southwest can generate fewer cost savings as fuel costs rise and the numbers of vacationers plummet. More airlines are adopting its 'nuts only' service, diluting the image of its unique brand. However, luxury service is less in demand, given the still-shaky nature of the economic recovery.
Q4: "Traditionally, the effects of tax policy on firms' demand for investment are summarized in estimates of the 'user cost of capital.' The user cost of a capital investment is the minimum return a firm needs to cover depreciation, taxes, and the opportunity costs of the funds used to finance the project. Lower user costs typically translate into higher investment levels," thus reducing taxes can stimulate investment by reducing the user cost of capital (Gale 2010). However, depreciation of investments for items such as facilities and machinery is inevitable, and will extract some toll upon the firm, no matter what the tax rate. "Almost every business must invest in some major equipment, vehicles, machinery, or furniture in order to operate" on a regular basis (Capital assets, 2003, Complete Tax).
In contrast to the user cost of capital, or depreciation estimated upon a per-project basis, "major assets that will be used in your business for more than a year are known as capital assets" or "assets that have a useful life of more than one year" (Capital assets, 2003, Complete Tax). Measuring depreciation in terms of capital assets requires taking stock of depreciation that takes place over time, rather than on a per-project basis. From an accounting standpoint capital assets are written off for more than one year, and the costs of depreciation are measured over the course of the years the entity uses the capital asset: depreciation may be measured regularly on a year-by-year basis, or may increase as the use of the asset depreciates more quickly from year to year.
Q5&6: If energy prices fall, the input costs of providing transportation will reduce for the firm, thus increasing the firm's profits if demand remains the same. In the short run, firms will respond to the fall in energy prices by increasing their services and possibly decreasing fare prices, to increase profits. In the long run, however, the market will begin to 'level out,' as there may be more market...
There is also a limit to how much a firm can produce, given its current assets. Eventually, the law of marginal utility will mean that it will become too costly to over-expand its offerings to the public and the level of demand will not justify such an expansion.
(Source: Nobilis 2010)
Fuel prices tend to be relatively inelastic: it is difficult, if not impossible, for the consumer to eliminate the use of transportation-related costs entirely. There is also a limit to how many transportation services the public can consume, even if they chose to fly more in the wake of decreased fares in the short-term. Other constraints will limit traveling, thus the truism that all constraints on behavior are costly. As there is a limit to how much the average vacation or business traveler can increase or decrease his or her travel, the short-run total cost curve lies above the long-run total cost curve, and the long-run costs resembles more 'level' behavior in the wake of the inelasticity of fuel demand.
Amadeo, Kimberly. (2009, December 20). Facts about NAFTA. About.com.
Retrieved April 21, 2010 at http://useconomy.about.com/od/tradepolicy/tp/NAFTA_Facts.htm
Capital assets and depreciation. (2003). Complete Tax. Retrieved April 21, 2010 at http://taxguide.completetax.com/text/Q14_2900.asp
Gale, William G. (2010). Deficits, interest rates, and the user cost of capital: A reconsideration of the effects of tax policy on investment. The Brookings Institution. Retrieved April 21, 2010 at http://www.brookings.edu/papers/2005/07taxes_gale.aspx
Messing with success. (2007). LA Times. Retrieved April 21, 2010 at http://articles.latimes.com/2007/nov/19/opinion/ed-southwest19
Murga, Mikel. (2002, September 6). Urban transportation planning MIT Course 1.252j/11.380j
Retrieved April 21, 2010 at http://ocw.mit.edu/NR/rdonlyres/Urban-Studies-and-Planning/11-380JUrban-Transportation-PlanningFall2002/4FC3B113-023B-4503-8F7F-351104D777EE/0/Week1a.pdf
Nobilis, Lauren. (2010). Price elasticity. Biz Development. Retrieved April 21, 2010 at http://www.biz-development.com/Finance/7.4.PriceElasticity.htm
a. NAAQS were established for six principal pollutants. Describe each and give examples of each applicable pollutant. (10 points) The National Ambient Air Quality Standards (NAAQS) were established in order to cope with six principal pollutants. The pollutants can be described as follows: 1. Carbon Monoxide (CO) – This is a pollutant that is in the form of an urban smog. It is more often perceived in different regions such as California
, Target Stores Inc. And Mattel Inc., are growing increasingly nervous about open threats of a work stoppage by dock workers at the Ports of Los Angeles (Greenberg, 2002). They actually turned to congress in hopes of preventing a strike. There appears to be a constant struggle between shipping companies and employees. Again in 2008 there were heated debates brewing. With 14 weeks to go before the agreement expired, contract
By federal law, all passenger airliners now feature cockpit doors that are locked by the pilots from inside the cockpit. Likewise, pilot training now includes the specific instructions not to open the door in response to any occurrence or emergency in the passenger cabin; instead, pilots are under instructions to land the aircraft immediately in response to any perceived emergency that would have previously been cause to investigate beyond
(Buchanan, 72) The economic policy tools that were employed just after the war subsequently underwent some changes. From 1947 to 1950 direct controls on wages and distribution were eliminated followed by removal of trade controls in 1958. However, the government continued to maintain its hold over prices and credit distribution which made it different from many of its neighboring states in the postwar period. The French Ministry of Finance exerted
In cases involving continued discrimination, disability lawyers have made the point that freedom of movement is essential in making sure that such individuals are gainfully employed. Access to public transportation can abrogate the need for continued public assistance in financial terms. Legislators, too, have recognized access to transportation as a necessary prerequisite to obtaining work. A Harris poll cited by Senator Durenberger noted that, "three of ten disabled persons stated that
Transportation Improvements and Accountability in San Francisco Bay Area The process has been much more painful and has taken much longer than anyone anticipated, but today, by any measure, San Francisco is a world-class city. The Bay Area in particular is poised to become one of the most livable regions in the entire nation as the result of progressive and far-sighted transportation projects and investments in civic infrastructure. To determine how