One of the great ambitions of billionaires such as Sir Richard Branson and Elon Musk is to commercialize spaceflight travel. Unlike Sir Richard Branson, however, Elon Musk has taken the step further by launching the first-ever privately owned jet (SpaceX) to the International Space Station (ISS) in May 2020.

• Why are there a limited number of facilities (host offices, launchpads, factories, and test facilities) for SpaceX that produce commercial rocket aircraft and thousands of plants run by hundreds of firms that produce light bulbs? Explain in terms of economies of scale.

(6 marks)

• Assume that SpaceX has a plant of fixed size in Texas and that it can vary its output only by the amount of aerospace engineer it employs.The table below shows the relationships among the number of aerospace engineers employed, the output of SpaceX, the marginal product of aerospace engineer, and the average product of aerospace engineer.
• Assume each aerospace engineer costs SpaceX $200 per hour.Compute the total cost of each aerospace engineer SpaceX might employ, and enter these figures in the table.
• Now determine the marginal cost of SpaceX's product as the company increases its output.Enter these figures in the table.
• If the aerospace engineer is the only variable input, the total aerospace engineer cost and total variable cost are equal.Find the average variable cost of SpaceX's product.Enter these figures in the table.
• Describe the relationship between the marginal product of the aerospace engineers and the marginal cost of the SpaceX's product.