Running head: ECONOMICS 1

ECONOMICS

NAME

INSTITUTIONAL AFFILIATION

INSTRUCTOR

SUBMISSION DATE
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Question 1

If the manager of Redstone wishes to maximize profits, he should then consider

producing 900 units as this will yield the highest profit and return for the firm (Hoksbergen,

2018). This high return will enable the firm make high returns and be able to sustain its

operations and its production. In addition, Redstone will be able to compete favorably in the

market as well with its competitors posing a high return for its investors and shareholders as

well. The units produced of 900 will ensure that the cost is highly maintained and sustained and

ensure maximum returns to make the firm grow and improve on its working and income ways

(Hannigan et al., 2015). Also, the Redstone needs to ensure that their expenditure scale is low to

increase the profit margins.

Question 2

The manager should choose to produce at least 500 units so as to ensure maximum

returns and favorable working environment for his employees as well. This will ensure high

return on both ends as the firm will yield profits from its operations and sustain its employees

and ensure they are well motivated to work and achieve more for the firm. This will ensure

growth for both parties as the employees are well maintained to ensure continuation of

production. This will enable the firm compete favorably and ensure their employees needs are

well taken care of (Low & Lee, 2014). The tasks at the organization will be fully handles within

the set time and at a reasonable charges thus the profit margin remaining on the higher scale.

Question 3

The doubling of the fixed costs has led to the increase in the total costs as well. The

increase in fixed costs has led to the increased the average fixed costs and the increase in the
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average total costs as well. The SMC reduces as well due to the effect of the increase of the fixed

costs. Therefore, the output choice in task 1 and 2 is 900 and 500 units respectively for

sustainable returns and profitability. The difference in the units is due to the variation in the

number of output units and the units necessary for the increase of profit margin to maximum

profitability (Hoksbergen, 2018).

Question 4

However as it is expected the fixed costs would have led to the reduction in the general

revenue and profits as well. However, this is not the case as the price per unit is increased. This

would have led to the significant reduction in profit as well. However since the firm decided to

increase its quantity price from 150 in the first period to 200 in the second period; the profit

increased significantly as well (Kroulek et al., 2019).

Question 5

The fall of the fire pits globally to 585, the organization needs to produce an average of

700 units. These are adequate units to ensure that the fire pit falls are controlled effectively.

Therefore, the production of 700 units will ensure sustainability in the operations to increase

profits since the prices will increase appreciably (Turnbull, 2016).

Question 6

The production of units in the Redstone is adequate enough for the smooth running of the

firm. The prices of their units, despite the drop recorded as in question 5, are on a profiting

margin. However, the profit is inadequate for effective operation of the firm. The units produced

are 5000 units which are sufficient. When the global prices remain the same for a longer time,
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the company will be at verge of closure due to the less profits being recorded thus sustainability

becoming a problem. As a result, the organization will barely have smooth cash flow. As a result,

in the short run, if the units produced do not increase, the company may end up closing (Low &

Lee, 2014).

Question 7

The firm should not shut down in the long run as the firm is making profits and becoming

highly competitive in the airline industry. This will enable it grow and maintain in the market

ling enough not to close down. This is because of the high profits and returns posted by the firm

and will make it sustain its operations and make it survive in the industry. This will ensure that

the firm does not close down and continue its operations in the future (Kroulek et al., 2019).

Question 8.

The US airline markets remain to be highly competitive due to the good services and

security assurance to their customers. Despite their high charges of their air tickets, the offer

trustable services to their customer. Besides, it does not run on any debts thus running within the

sustainable cash flow. This has, thus enabled them to be competitive in the market. Besides,

quality is their objective (Hannigan et al., 2015).

The factors that lead to high competition in the airline industry are low barriers to entry in

the market that makes the other small companies enter and leave the market as they wish. This

poses a threat to the firms already in the market and makes them divide the profits that exist in

the market.
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Another factor is the high cost of production that is incurred by the firms that are

operating in the airline industry. This leads to the high contribution of reduction of excesses and

profits gained hence make their operations difficult as the income is reduced (Turnbull, 2016).
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References

Hannigan, T. J., Hamilton III, R. D., & Mudambi, R. (2015). Competition and competitiveness in

the US airline industry. Competitiveness Review, 25(2), 134-155.

Hoksbergen, B. (2018). Archaeological Phase II Evaluations of Sites 1Ma697 and 1Ma1648,

Two Early Nineteenth Century Homesteads on Redstone Arsenal, Madison County,

Alabama.

Kroulek, O. S., Morgan, J. A., Alexander, L. S., Whyte, T., Parker, K., Schneider, M., ... &

Jurgelski, B. (2019). NHPA Phase III Data Recovery at Sites 1MA1161, 1MA1162, and

1MA1165, Three Historic African-American Farmsteads, on Redstone Arsenal,

Huntsville, Alabama.

Low, J. M., & Lee, B. K. (2014). Effects of internal resources on airline

competitiveness. Journal of Air Transport Management, 36, 23-32.

Turnbull, A. (2016). An Analysis of the Organizational Structure of Redstone Test Centers

Environmental and Components Test Directorate With Regard to Instrumentation Design

Capabilities. Naval Postgraduate School Monterey United States.