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1)Giorgia is an 18 years old Italian student
1)Giorgia is an 18 years old Italian student. Like other students in Italy, she just
received a cash gift called “Bonus Cultura” from the Italian government. The
cash gift is meant to boost the spread of reading and other cultural activities
among young people. The cash gift amounts to I (in e) and can be spent
on books, x1, and concert tickets, x2.
Giorgia’s preferences over books and concert tickets can be represented
by the utility function
U(x1, x2) = x
3/4
1 x
1/4
2
5. Suppose that p1 = e 15 and p2 = e 40. Derive analytically the Engel curve for books.
6. On a properly labeled graph, draw the Engel curve for books.
7. Calculate the income elasticity of the demand for books (use the symbol
ξx1
for the income elasticity). Based on the income elasticity, what type
of good are books? Explain your answer.
8. Suppose this year’s ”Bonus Cultura” (the cash gift) amounts to e 400.With the price information provided above, write Giorgia’s budget con-
straint.
Giorgia is an 18 years old Italian student. Like other students in Italy, she just received a cash gift called "Bonus Cultura" from the Italian government. The cash gift is meant to boost the spread of reading and other cultural activities among young people. The cash gift amounts to 1 (in €) and can be spent on books, 21, and concert tickets, 22. Giorgia's preferences over books and concert tickets can be represented by the utility function U (1,22) = 21 3/4 1/4 1. On a properly labeled graph, draw three indifference curves.
5. Suppose that p? = € 15 and p2 = € 40. Derive analytically the Engel curve for books. 6. On a properly labeled graph, draw the Engel curve for books. 7. Calculate the income elasticity of the demand for books (use the symbol Sr, for the income elasticity). Based on the income elasticity, what type of good are books? Explain your answer. 8. Suppose this year's "Bonus Cultura" (the cash gift) amounts to € 400. With the price information provided above, write Giorgia's budget con- straint.
2)
Pick any Airline of your choice that has all the three types of Airline models International, Domestic and LCC, and answer the under given questions with respect to these airlines.
- Comparative analysis based on how are they different from each other with valid examples.
- What are the various types of Challenges faced by these airlines when talking about the current pandemic situation? How do you think they can be profitable again in the future? Explain in detail
with references please
Expert Solution
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2)Let us understand this question through an example of spicejet . Spicejet is an LCC airline which contains both domestic as well as international flights. Spicejet has marked its growth every financial year in the recent past and its net income by March'20 is 13 million rupees.
The number of destinations for domestic flights are generally grater than the number of destinations for international flights. Like, for Spicejet there are 54 destinations for domestic flights and 15 destinations for international flights.
Generally, there are no LCC airlines in India that are part of IATA( International Air transport Association). However, Spicejet is the first Indian LCC to join IATA recently.
In 2019, a lot of increase has been observed in the number of daily flights and the number of destinations for the LCC flights for both domestic as well as international due to UDAN scheme.
However, due to coronavirus pandemic the demands for air flights have reduced rapidly. This has led to decline in the daily number of flights.
Indian airlines are estimated to report a loss of USD 600 million( not including state owned Air india) for the Jan- March Quarter.
Also, in the initial phase of pandemic it was observed that the flight bookings were cancelled a lot. For eg: LCC Spicejet has reported a net loss of Rs 935 crore. The factors for this loss are Covid-19 as well as the grounding of Boeing 737 MAX.
Also, due to covid 19, there are a lot of travel restrictions imposed by the government. the domestic flights were completely restricted for about 2 months and the international flights are not allowed to fly till date. All these travel restrictions have led to a lot of decline in the aviation industry.
India is currently the third largest domestic aviation market in the world and is expected to overtake the UK to become the third largest Air Passeneger market by 2024. So, in the future these airlines can be profitable only by the government policies that will increase the investments as well as the business in the aviation industry.
For eg: Under Union Budget 2020, Government passed Krishi Udan scheme for both domestic as well as international routes. This will help farmers in transporting agriculture products and improve their product value.
Also, the airlines will have to come up with a plan to create a safe and sound environment in order to protect their passengers from any kind of hazardous pandemic. This will help in gaining trust among their customers. These safety measures will be seen as one of the most important aspects to book a flight in the near future and the airlines providing the best services from the safety point if view will definitely encounter greater profits.
Refernces
https://travtalkindia.com/spicejet-1st-indian-lcc-in-iata/
https://www.businesstoday.in/current/corporate/spicejet-fy20-results-airline-reports-net-loss-rs-935-crore-covid-19-boeing-737-max/story/411439.html
https://www.thestatesman.com/business/spicejet-daily-flights-count-to-go-up-to-620-from-516-1502736657.html
https://www.ibef.org/industry/indian-aviation.aspx
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