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Intermediate Microeconomic Theory analysis - Research Paper Example

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In the industrial setting, market entry is an ordinary occurrence that happens often and can never face restriction provided it meets the necessary basics for starting a commercial organization. Entry provides such important factors like provision of an equilibrium force that…
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Download file to see previous pages As noted in the recent market trends the competitive pressure arising from initiative entry in airlines routes have increased drastically. Consequently, Airline carriers are forced to improve on operational efficiency that results to lower fares and heightened competition. This volume intends to analyze the Airline market prior the entry of Frontline airlines and the implications after its entry.
The intermediate microeconomics theory analyses business situations where a market or industry depends on a pricing system. This is in cases where the pricing system provides guidance in making decisions that dictate the rates of consumption, production, and distribution of services and goods. The theory further analyses the economic behavioral patterns and the decisions made by economic agents at their individual capacities. Additionally, the theory uncovers the consequent implications felt in market economies when trends alter relative market prices that play the role of economic signals policy makers use to make decisions (Williams, 2014).
Prior the entry of Frontier Airlines, there were limited aircrafts, most of the operational airlines had their consumers only being very wealthy and prominent people. Therefore, the demand for airlines was not only low but also expensive. In this era, the airline companies had a complete monopoly over the business arena. Against this background, the market price for the services offered was very expensive. Additionally, the consumers of the services never got of high-quality services because there lacked any competitors to threaten the service providers with the loss of their customers. Therefore, at this period with no perfect competition, the industry was very exploitative to consumers. Furthermore, there were high average market prices on services in the absence of substituent service providers.
As revealed by data examination from the transport department, there was an increase in the number of airline ...Download file to see next pagesRead More
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