Post a New Question

Managerial Economics

posted by .

The Air Force awarded a $93 billion (or more) contract to a group led by Lockheed, Boeing and General Dynamics to build th new fighter plane for the 21st century, the YF-22 Lightning 2. A group headed by Northrop and McDonnell Douglas, which had spent more than $1 billion on development for their alternative YF-23, lost out on the contract. It was explained that Lockheed group got the contract because their "quality for the price per plane was higher". He did not elaborate. In terms of the theory (consumer theory) did he mean (a) the Lockheed quality was higher? (b) the Lockheed price was lower? or (c) neither, what did he mean?

There is not enough information to answer the question. could be a) could be b) could be both a and b.



Now you know why I am confused. But what I orginially wrote was something the airforce did and when the Secretary of Defense explained briefly why Lockheed group got this contract is because the quality for the per plane was higher, He did not elaborate. Can you still help?

Im not sure I can help as an economist. But, I would suggest you fall back on first principals. Each plane has a marginal cost -- for now assume its simply the price of the plane, plus some probability that the plane will need to go into the shop for repairs. With each plane come a myriad of benefits. The benefits from each plane may be different. And DOD has notions of what the probability of repairs are and what the difference in benefits each plane provides.

Second, if you are still having trouble getting a grasp on the problem, try putting the problem in terms of something you can relate to (e.g., why dad bought the Caddy instead of the Buick. ) And finally be a good economist and don't be afraid to assume away the intractable parts of the problem.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Chemistry

    Which of the following does form a Group II cation?
  2. Chemistry

    I have two questions: 1. Which group in the periodic table reacts with H2 to form compounds with the general formula MH2?
  3. psychology

    Consider your immediate peer group at work. How would you describe authority as it exists and is exercised in this group?
  4. PSYCHOLOGY

    Consider your immediate peer group at work. How would you describe authority as it exists and is exercised in this group?
  5. managerial economics

    In 1991 the Air Force awarded a $93 billion or more contract to a group led by Lockheed, Boeing, and General Dynamics to build the new fighter plane for the 21st century, the YF-22 Lighning 2. A group headed by Northrop and McDonnell …
  6. managerial economics

    In 1991 the Air Force awarded a $93 billion (or more) contract to a group led by Lockheed, Boeing, and General Dynamics to build the new fighter plane for the 21st century, the YF-22 Lightning 2. A group headed by Northrop and McDonnell …
  7. managerial economoics

    close relationship between mnagement and economics has led to the development of managerial economics
  8. math 4 grade

    Some poeple believe that Jan 1,2000is the first day of the 21st century.Other poeple beleive that the honor belongs to the Jan 1,2001.But everyone should agree that Jan 1,2002 is the first"sum-day" of the new century when you write …
  9. Economics

    There are two groups of individuals of equal size, each with a utility function given by U(M) = sq. root(M), where M = 100 is the initial wealth level for every individual. Each member of group 1 faces a loss of 36 with probability …
  10. Math - help please

    Problem: The rock group Loco Moco was scheduled for a concert at the Blaisdell Concert Hall. Because it was the concert highlight of the year, there was excitement in the air and people were eager to get tickets, which could only be …

More Similar Questions

Post a New Question