Running Head: ECONOMIC BRIEF 1
ECONOMIC BRIEF 3
Economic Brief
Lucy Rowell
ECO100
Professor Cole
5/2/19
Economic Brief
Amusement and theme parks are places where people visit so that they can have fun and also they can take their meals because restaurants are available in the amusement and theme parks. People can do various things when they visit these places because there are different types of activities which one can participate while having fun. These facilities are more elaborate when they are compared to the city parks and playgrounds because they provide attractions which attract different age groups. There are also some differences between amusement parks and theme parks because amusement parks contain themed areas and as for the theme parks, they focus more on the more intricately designed themes which are revolving around some specific subjects (Martin, 2015).
Industry Goods and Services
There are various services which are offered by amusement and theme parks which include shows, rides, retail outlets, ad food services facilities. These activities are aimed at ensuring that the clients are having fun whenever they visit the place. Since having only one type of activity will discourage people from visiting the lace because they will get bored with the only activity being carried out, the organization ensured that there are various activities which the clients can participate in. In addition, retail outlet enables the clients to buy what they want within the parks. The restaurants make availability of food to the clients easy hence they will spend more time within the parks since all that they need is available (Mathew, 2015).
Market Structure and Characteristics
The market structure of the amusement and theme parks is perfect competition in that it is competing with other organizations which offer similar services to win more customers. There are other parks which are smaller as compared to the amusement parks and theme parks but they offer most of the services which are offered by amusement and theme parks. So, to win more customers, the organization ensures that customer satisfaction is achieved. This, therefore, has encouraged amusement parks and theme parks to expand their services by providing more services within the parks like providing foods in the restaurants and also by opening retail outlets. These are the additional services which are offered so that they can win more customers in the competitive market.
Microeconomic Relationships, Market Outcomes, and/or Trends
The trends for the market of amusement parks and theme parks is that they will keep expanding and making more profits because they are offering different activities at the sam.
2. Economic Brief
Amusement and theme parks are places where people visit
so that they can have fun and also they can take their meals
because restaurants are available in the amusement and theme
parks. People can do various things when they visit these places
because there are different types of activities which one can
participate while having fun. These facilities are more elaborate
when they are compared to the city parks and playgrounds
because they provide attractions which attract different age
groups. There are also some differences between amusement
parks and theme parks because amusement parks contain themed
areas and as for the theme parks, they focus more on the more
intricately designed themes which are revolving around some
specific subjects (Martin, 2015).
3. Industry Goods and Services
There are various services which are offered by amusement and
theme parks which include shows, rides, retail outlets, ad food
services facilities. These activities are aimed at ensuring that
the clients are having fun whenever they visit the place. Since
having only one type of activity will discourage people from
visiting the lace because they will get bored with the only
activity being carried out, the organization ensured that there
are various activities which the clients can participate in. In
addition, retail outlet enables the clients to buy what they want
within the parks. The restaurants make availability of food to
the clients easy hence they will spend more time within the
parks since all that they need is available (Mathew, 2015).
Market Structure and Characteristics
The market structure of the amusement and theme parks is
perfect competition in that it is competing with other
organizations which offer similar services to win more
customers. There are other parks which are smaller as compared
to the amusement parks and theme parks but they offer most of
the services which are offered by amusement and theme parks.
So, to win more customers, the organization ensures that
customer satisfaction is achieved. This, therefore, has
encouraged amusement parks and theme parks to expand their
services by providing more services within the parks like
providing foods in the restaurants and also by opening retail
outlets. These are the additional services which are offered so
that they can win more customers in the competitive market.
Microeconomic Relationships, Market Outcomes, and/or Trends
The trends for the market of amusement parks and theme parks
is that they will keep expanding and making more profits
because they are offering different activities at the same time.
The different activities are designed in a way that they attract
people of different age groups. Since it attracts all the members
of the society irrespective of their ages, it will expand as it
attracts more customers hence leading to its expansion. This is
4. the trend of the organization whereby with time, it will have
expanded to be a bigger organization (Younger, 2016).
How Government Intervention May Impact the Industry
Government intervention entails the government coming up with
policies which govern the way in which the services are
rendered. Also, in some instances, the government gives the
time when the parks should be operational and when to close
them. This will interfere with the services rendered because the
owners of the parks will have to observe time as per the policies
given by the government. Also, the government might decide to
regulate the prices of the services offered at the parks hence
reducing the profits in case the park owners are charging more
than what is recommended. The government can also decide the
types of services rendered. This is an indication that the
government influences how the amusement and theme parks
operate by coming up with different policies governing their
operations.
References
1. Martin, B. (2015). Theme Parks. New York, NY: The Rosen
Publishing Group.
2. Mathew, B. (2015). Kerala Tradition & Fascinating
Destinations 2015. Info Kerala Communications Pvt.
3. Younger, D. (2016). Theme Park Design & the Art of Themed
Entertainment.
5. Final Report
Title
By Your Name
ECO100
Professor’s Name
Date
1. Introduction
(In this section, provide a one-paragraph brief introduction
about your selected industry. Please delete all instructions and
use double-spacing before submitting your paper.)
2. Size and/or Growth of Industry
Write at least one paragraph assessing the size and/or growth
rate of the industry relative to the national economy.
If you click on the GDP by industry, you should be able to
assess the numbers related to the size and/or growth rate of the
industry relative
You may also click on the percentage change in GDP by
industry (especially the value added by industry) for additional
inputs to this question.
· You should use the statistics to determine the weight of the
industry relative to the GDP.
· You may also use the revenues, number of employees, and/or
number of customers to substantiate your idea.
· Do not use bulleted or numbered lists.
· Write clearly and professionally; follow the Strayer Writing
Standards.
3. Macroeconomic Indicator or Policy and Its Importance and
Impact
Write at least one paragraph identifying the macroeconomic
indicator or policy that the industry should monitor (inflation,
6. unemployment, imports and exports, government expenditure,
taxes, and/or interest rates). Explain why the macroeconomic
indicator or policy is important and how it may impact the
industry.
· Consider its importance and impact by looking at one or more
of the indicators below:
1. The operational costs supported by the industry as compared
to the revenues.
2. The trends observed in terms of profits and/or number of
employees to substantiate your idea.
· Do not use bulleted or numbered lists.
· Write clearly and professionally; follow the Strayer Writing
Standards.
4. Recent Trend
Write one paragraph describing a recent trend in the
macroeconomic indicator or policy in part 3. Include a graph,
table, or chart that illustrates the observed trend.
· Focus on the stability or increase/decrease of the chosen
indicator when commenting on the graph, be certain to follow
your graph or table with substantiated comments, explaining
any major discrepancy in the data or the change in the shape of
the curve.
· Do not use bulleted or numbered lists.
· Write clearly and professionally; follow the Strayer Writing
Standards.
5. Conclusion
Write a one-paragraph conclusion that summarizes how you
think the industry will perform in the future. Attention should
be paid to whether the observed trend is expected to continue.
· This should be your (own) opinion.
· Explain what you learned about the topic. Attention should be
paid to whether the observed trend is expected to continue.
· You may also expand upon this point by explaining what
conclusion you draw from your research on the topic.
· Do not use bulleted or numbered lists.
· Write clearly and professionally; follow the Strayer Writing
7. Standards.
Sources
1. List in order of use.
2. List a second source here.
3. Repeat for additional sources.
2
1
Assignment 2: Final Report
Example Paper
Strayer University
ECO100
Dr. Jean Fonkoua
8. September 8, 2018
2
Final Report: Airline Industry
Introduction
The US airline industry is on a winning streak following
seventeen consecutive
productive quarters. Even with its most significant operational
costs, labor, and fuel spikes,
persistent demand on increasing capacity, the airline industry
remains in the black. This paper
will focus on critical areas such as the assessment of favorable
growth rates up through 2036,
government taxation and its impact and trends on the airline
industries. All signs point to
growing demand for global connectivity. Alexandre de Juniac,
Director General, and CEO of
the International Air Transport Association (IATA) said, “The
world needs to prepare for a
doubling of passengers in the next 20 years. It is also a huge
9. challenge for governments and
industry to ensure we can successfully meet this essential
demand” (1).
Size and Growth Rate Assessment
The IATA, in its latest press release, updates that the airline
industry is expected to see
roughly 7.8 billion air travelers in 2036, almost double the 4
billion air passengers anticipated to
fly this year. This latest update comes from the most recent
release of the IATA's 20-Year Air
Passenger Forecast, base prediction on a 3.6% average
Compound Annual Growth Rate (CAGR)
(2). Global air travel is expected to sustain favorable growth
rates up to 2030, notwithstanding
hurdles faced within the industry. High jet fuel prices and slow
economic growth worldwide
caused strains within the industry. Although challenging,
improvements in passenger totals
offset tense economic circumstances which quickly translate
into an increased financial
performance of the airline industry. Strong representation in
passenger patronage supports an
impressive GDP growth of 3.5% (the strongest since 2010).
Subsequently, the global aviation
10. 3
industry is predicted to reach up to 33.8 billion US dollars in
profits by the close of 2018, up
from barely 8.3 billion in 2011. Annual growth report shows
that between "2017 and 2036, the
number of airline passengers is expected to increase at a
combined annual growth rate (CAGR)
of 4.7 percent" (2).
Key Indicator to Monitor (Inflation) and Importance and Impact
to the Airline Industry
In the airline industry, important macroeconomic indicators are
unemployment, inflation,
and the business cycle. An important indicator, inflation,
influences both the business cycle and
unemployment rates, and so it must be monitored closely by the
airline industry. For example,
the airline industry earnings are reduced at a startling pace due
to inflation. Decreased profits
affect the economic position of the airline industry, which in
turn produces a weak employment
environment. Moreover, there is an interchangeable correlation
11. between inflation rates and the
rate of unemployment. This relationship includes trade-offs
whereas a given high rate of
inflation lowers the rate of unemployment to reduce inflation,
price regarding a higher
percentage of unemployment must be borne (3).
Inflation increases the price of goods and services and decreases
the purchasing power of
customers. Also, increases to products and services generate
higher fuel costs resulting in steep
ticket prices and sometimes canceled routes to lower costs for
the airlines. Furthermore, inflated
fuel prices subsequently increase the overall costs and
significantly decreases the demand in the
airline industry (IATA, 4). Since 1996 the inflation-adjusted
price of air travel to consumers has
reduced by half. The IATA reports that "International tourists
traveling by air are expected to
spend more than $750 billion in 2018, a rise of 15% in just over
2 years" (4). Furthermore,
financial instability within the industry reduces the ability to
hire new employees, thus creates an
12. 4
increase in unemployment rates, which in turns is passed on by
influencing the quality of the
services given to its patrons, which also contributes to lower
demand for goods and services.
Moreover, variations in the interest and employment rates
further correlate to the airlines
business cycle (or economic cycle). A business cycle is a
sequence of various periods of
economic growth and a declining period, or, "the transition of
the economy from peak to trough
and trough to peak" (5). Inflation will force the airline industry
towards economic decay, and it
will create financial uncertainty in the industry. The airline
industry has a long-term business
cycle, which produces low earnings and yields to its
stockholders. In the development and
growth cycles of business, both the production and hiring boom
until the full employment of
resources and production reach their peak
Inflation – Recent Trends Within the Airline Industry
Profits within the global airline industry will drop in 2018 as
fuel, labor and interest rates
13. increase. In December, the IATA flagged higher than average
spending on labor and fuel, which
make up more than half of the operating expenses within the
airline industry. Within the last few
months, the IATA then lowered its profit prediction for 2018 by
12 percent to $33.8 billion,
down from its December forecast of $38.4 billion (6).
Moreover, airline jet fuel costs are
estimated to increase to as much as $84 a barrel in 2018, while
the IATA's December estimates
were based on a per barrel price of $70 (7). Furthermore, on
April 26, Douglas Parker, CEO of
American Airlines, noted that oil prices have spiked to 60%
from last summer, a significant
increase over a short period (8).
5
Meanwhile, the U.S. Bureau of Labor Statistics reports the cost
of an airline ticket in
2018 is 10.01% higher versus that of 2000, which is a $10.01
disparity in value (9). Between
14. 2000 and 2018, airline ticket pricing experienced a median rate
of inflation of .53 percent per
year. Put differently, a $100 ticket in 2000 would now cost
$110.01 in 2018 (9). In fact, in June,
IATA's Director General and CEO, Alexandre de Juniac, on
concerns of increased fuel costs,
declared the inevitable, airlines would have to pass some of the
fuel burdens onto its passengers
(10).
As fuel costs increase, the airline’s objectives are still all about
their revenues. As seen in the
chart above, the Q2 2017 to Q2 2018 income statement for
United Airlines show us the impact to
net income and the airline's ability to increase the ticket
revenue beyond the increased fuel costs.
Conclusion
In conclusion, we consider inflation a well-known economic
indicator within the airline
industry, as well as other signs arising as crucial for
understanding the actual market demand.
While GDP remains as an essential driver for the airline
industry, its relationship to aviation’s
15. 6
growth has evolved, this is apparent at a global level, though
induced by actions at a locally
geographical level. Moreover, inflation is not the only factor
that motivates airline growth,
elements such as private consumption, international trade,
tourism, crude oil prices, airline
profits and increase in productivity all contribute to the
economic factors (11). The result
provides a unique viewpoint on the strategies of the global
airline industry, considering fuel
costs, which have significantly increased for all airlines. The
federal government in its quest to
continue its full potential of progression has implemented
global standards on security, taxation,
and global regulations to build cost-efficient infrastructure and
house increasing demand to the
detriment of the airline industry.
16. 7
Sources
1. IATA, 2017, 2036 Forecast Reveals Air Passengers Will
Nearly Double to 7.8 Billion,
https://www.iata.org/pressroom/pr/Pages/2017-10-24-01.aspx
2. Statista, 2018, Annual growth in global air traffic passenger
demand from 2005 to 2018,
https://www.statista.com/statistics/193533/growth-of-global-air-
traffic-passenger-
demand/
3. OpenStax, 2015, The Phillips Curve. OpenStax CNX.
http://cnx.org/contents/06001366-
[email protected], 2018, A Journey Through American
Transportation 1776-2016,
https://transportation.gov/50/timeline/accessible
4. IATA, 2018, Air Passenger Market Analysis – April 2018,
https://iata.org/publications/economics/Reports/pax-monthly-
analysis/passenger-analysis-
apr-2018.pdf
5. OpenStax, 2017, Tracking Real GDP over Time, OpenStax
CNX,
http://cnx.org/contents/[email protected]
6. IATA, 2018, Economic Performance Of The Airline Industry,
17. https://www.iata.org/publications/economics/Reports/Industry-
Econ-Performance/IATA-
Economic-Performance-of-the-Industry-mid-year-2018-report-
final-v1.pdf
7. David Reid, 2018, Airline profits to slump in 2018, industry
body says,
https://www.cnbc.com/2018/06/04/iata-forecasts-airline-profit-
fall-in-2018.html
8. Dough Cameron & Bradley Olson, 2018, Companies Feel the
Impact of Rising Oil
Prices, https://www.wsj.com/articles/companies-feel-the-
impact-of-rising-oil-prices-
1524786472
9. BLS, 2018, Bureau of Labor Statistics- Consumer Price
Index-Airline Fares,
https://www.bls.gov/cpi/factsheets/airline-fares.htm
10. Tim Hepher and Victoria Brown, 2018, Global Airlines
Issue Warning Over Trade
Tensions, https://www.reuters.com/article/us-airlines-
iata/global-airlines-issue-warning-
over-trade-tensions-idUSKCN1IZ04I
11. IATA, 2017, Strong Airline Profitability Continues in 2018,