making 20 aircraft parts? What '3 the total amount of car parts produced? New, if the market is opened up to trade. represent the efcient production of an aircraft parts on the PM. what is the total number of car parts produced now? Part 2 Vehicles and aircraft are twp of Britain's largest exports. together making up 17.7% of the total exports annually. While nal assembly of many cars occurs in Britain, the supply chains often span the globe. Iumpers for some Bentley Bentaygas, for example, are made in Europe but then sent to Crewe iUlt} for inspection betore going to Germany for specialist painting. Aiter that, they return to the UK for nal assembly. Assume Bresit will mean imposing tariffs [taxes on imports} on much of this supply chain, making it more expensive for BBC if they wanted to trade with Volkswagen. For this case. assume that imposition of taris as a result of Bresit acts as a restrictions on trade. Explain why Breait will make both companies worse off with reference to Part 1 above. Part 3 The market for aircraft parts has been stable for several decades. with no signicant changes to supply chains, or no new competitors or customers entering the market. Both supply and demand are settled, and price is relatively stable. Explain and illustrate using appropriate supply and demand curves, they likely short and medium terms Implications on this established equilibrium In the marltet generally, and particularly for ltllC of Ireait. Explain in detail what the change in the equlllarium price and quantity will be, and illustrate this in detail. Propose strategies that could be pursued by the companies and or governments to alleviate the worst impacts of Breait. Part 4 MC is considering a development of a new manufacturing plant in North America. to help alleviate any future disadvantages brought about by the impacts of Bresit. This plant would be to serve Boeing on a long term contract, and would be addltional to existing business. The project has an initial construction cost of 615 million. They will depreciate these assets over 25 years, after which the contract will have expired. and the plant is expect to be ready for repurposlng with only a residual value of 45 million. The nett increase in cash flow expected during this contract is as follows: 42million in Year 1. increasing by 596 per annum throughout the lifetime of the contract. BBC is considering this development. Alternative uses of the capital are available. with REC expecting the best alternative use [a plant in Brazil to serve the same contract} would yield an IRRofB'iG. Make recommendations in regards to whether RRC should go ahead with this project showing workings. Case Study Brexit Some have said that June 23rd. 2016 will go down as Britain's Independence Day! Others have been less positive about Britain's decision to leave the European Union. Financial markets, facing new found uncertainty, plunged. The pound fell hard against the dollar to a 304year low of $1.32. This decision caused ripples around the world, especially tn Europe. Britain is a strong consumption market for European goods. Bresit vote also caused uncertainty in many of the world's markets for a number of reasons. Britain, as the woddls 61:: largest economy. is a member of the influential 6? group of nations and an important hub for many industries, notably international nance. It's colonial past means it is influential around the world, and an important trade partner to many nations. Britain was the home of the industrial revolution. and is in many respects, the birthplace of modern economics particularly through the likes of John Maynard Keynes. Adam Smith, Alfred Marshall and oli'rers. It was felt by many that if Britain. IOng a champion of free trade. can vote to revoke a regional trade deal. howI much faith can businesses worldwide put in other international economic agreements? Economists understand comparative advantage and the gains from trade. To illustrate some of the impacts of Brexit consider the Rolls Royce Company {RRC}. RRC is a designer, distributer, and manufacturer of power systems for aviation and auto manufacturers. They are the former owner of car brands like Bentley and Rolls Royce, both of which they sold in 1911 [now owned by Volkswagen]. Assume Rolls Royce can produce two things. aircraft parts, which they sell to rms like Airbus, Boeing etc, or car parts, which they currently sell to a number of car manufacturers. They are considering expanding their business, and are looking at strategic options. thC can produce either 50 car parts, 100 aircraft parts, or a combination or both. After explorlng the market. RRC nds that Volkswagen is also producing both car parts and aircraft parts and may be open to trade, the benets of which RRC wants to consider. Volkswagen can produce either 120 car parts, so aircraft parts, or a combination or both. Part 1 Represent cars parts on the y-asis and aircraft parts on the s-asis. Draw ItltC and Volkswazen's PPF on the diagram below. Assume both P\": are linear. For sec, what Is the marginal opportunity cost of 1 aircra part? For Rita what Is the marginal opportunity cost of 1 car part? For Volkswagen, what is the marginal opportunity cost of 1 aircraft part? For Volkswagen, what is the marginal opportunity oust of 1 car part? who has the absolute eduantaie In the production of aircraft parts? Why? who has the absolute advantage in the production of car parts? Why? Assume each flrrn needs an aircraft parts and cannot trade. How many car parts ls each able to produce after