/33321/quizzes/79438/take Airlines seek new ways to save on fuel as costs soar F

Question

/33321/quizzes/79438/take Airlines seek new ways to save on fuel as costs soar Fuel is an airline's biggest single expense. In 2008, the cost of jet fuel rocketed Airlines tried to switch to newer generation aircraft, which have more fuel-efficie engines. Source: The New York Times, June 11, 2008 Explain how a technological advance that makes airplane engines more fuel efficient changes an airline's average variable cost, marginal cost, and average total cost. A technological advance that makes an airplane engine more fuel efficient an airline's average variable cost and an airline's marginal cost. increases, increases O does not change, decreases O decreases; does not change Pl nsert

Explanation / Answer

The correct option is decreases; decreases. Both average cost and marginal cost decreases. Because the new technology is fuel efficient so it is more efficient. Because engines are fixed cost so at lower level the average cost is higher whereas at higher output levels the average cost is minimum.

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