A regional airline owns 10 aircraft and employs 20 pilots. The airline makes an average of three trips per day with each of its 10 aircraft. The aircraft and their ground crews are idle part of the day. Minimum rest requirements for its pilots mean that if the airline wants to increase its flights, it must hire more pilots. The decision to hire more pilots is:
A) a short-run decision because the number of aircraft is held constant while the labor input is changed.
B) a short-run decision because the number of pilots is being increased; if the number of ground crew were decreased instead, it would be a long-run decision.
C) a long-run decision because hiring pilots will increase revenues over a long period of time for the airline.
D) a long-run decision because customers will become accustomed to the new flight schedule.

Question

Quizplus · Accepted Answer

In the short run, at least one factor of production is fixed. Here, the number of aircraft is fixed, and the airline is changing the labor input by hiring more pilots, making it a short-run decision.

A Regional Airline Owns 10 Aircraft and Employs 20 Pilots