Question

21. Boeing says that it has created the lightest metal ever, a micro-lattice material that it describes as 99.99% air and only about 1/10 the weight of carbon fiber. The micro-lattice looks like a sponge or a mesh, and it is simultaneously flexible and very strong, according to Boeing. It will first be used on space rockets that Boeing plans to build in the next few years and then it will be used to construct commercial planes a few years after that. The main use of the material would be to replace heavier structural components, such as sidewalls or floor panels of commercial jets.

Once this metal is used to begin manufacturing commercial planes, consider what impact its use as a structural component will have on the market (supply or demand) of flights provided by Delta, American, United etc.?

Explain in words:

a.) how demand or supply of flights will change.

b.) whether this change to demand or supply will create a surplus or shortage in the market for flights

c.) what will happen to the equilibrium Price and Quantity of commercial flights.

d.) Illustrate with a supply and demand graph the changes you expect to occur in the market for commercial flights.  

Answer 1

a) With the technological advancement, the new light weight input to be used to replace the traditional heavy weight input. And as with this upgradation, the production or the flying capacity will increase so it will have a positive impact on the supply and demand will remain unchanged initially.

b) As, there will be an increased supply due to production efficiency, this will lead to a surplus in the econony for commercial flights.

c) As, the supply curve shifts to the right , the equilibrium price will fall and quantity will slightly increase at the new equilibrium.

d) But, as the prices fall, there will be more demand at the lower prices and the demand curve will also shift to the right to cope with this, resulting in increase in prices and quantity altogether.