Question 3 (2 points)

Read attachment 3.

a] (1 point) Explain why there is likely to be an external effect associated with the decision made by the state environment department about the timing of controlled burns? (Acontrolled burn is where bushland is set fire to, in order to reduce the size of any unintended fire that might occur in that area.)

b] (1/2 point) What does the existence of the external effect imply about the timing of the controlled burns compared to the socially optimal timing?

c] (1/2 point) What do you think would be the most effective policy solution to ensure socially optimal timing of the controlled burn?

Question 4 (4 points)

Read attachment 4.

a] (1 point) How would you recommend that Qantas should have decided whether to invest in development of the new program for directing flight patterns?

b] (1 point) Would you classify as a fixed or variable input: (i) Qantas' new program for directing flight patterns; and (ii) fuel?

c] (1 point) Once Qantas has made its investment in the new program, what do you think will be the main effect on its costs of operation? What factors are likely to determine the size of effect on costs?

d] (1 point) In what way does the article suggest that the changed production method may also impact on the outputs that Qantas is able to supply?

Attachment 3

Wine growers reeling from the coronavirus pandemic have slammed the state environment department over the timing of controlled burns in the Macedon ranges that they fear will damage their harvest.

A last-minute attempt by lawyers to stop the first of three burns failed yesterday, with the blaze sending ripples of panic through vineyards where grapes are in the last stages of ripening and particularly vulnerable to smoke taint. Wine growers have been pleading with state authorities to halt the burn for a few weeks until their crops have been harvested. 'With grape harvest looming, controlled burns have Macedon winemakers fuming' by Henrietta Cook (The Age, Saturday February 27, 2021, p.12)

Attachment 4

Qantas expects to cut its fuel bill by as much as $40 million a year thanks to a radical overhaul to how it plots its flights across the globe.

The airline has spent five years and millions of dollars building a new flight planning program - which it says will materially cut its fuel bill and bring its ultra-haul ambitions closer to reality.

Qantas' team of dispatchers have used the same computer program for 30 years to plan the route of each flight, assessing weather, airspace traffic, safety and legal constraints on three of four possible routes. The new system uses cloud computing to crunch data on thousands of possible flight paths, using millions of data points - including the latest wind patterns, and varying altitudes and wind speeds - to build a cost map that presents the most efficient route...

A flight to Johannesburg, for example, was directed to fly 160 nautical miles further than it would normally, but in doing so cut the headwinds it experienced by two-thirds. The 747 arrived only three minutes later than scheduled and saved more than a tonne of fuel. The new system comes as Qantas assesses the viability of launching ultra-long, non-stop flights from Melbourne and Sydney to London and New York. In these cases, fuel burn would be a key consideration...

In the project's business case, it [was estimated] Constellation would cut Qantas' annual fuel bill by about 0.6 per cent. The airline now believes it will be closer to 1 per cent. That would translate to $40 million saving, based on this year's expected fuel bill of $40 billion.'Flight path changes will boost Qantas' by Patrick Hatch (The Age, December 10, 2018, p.20).