Answer to Question #200730 in Economics for inka

Question

Explain why fixed costs are high in the air-craft making industry.

Answer 1

Fixed costs are high in the air-craft making industry, because you have to invest a lot of money in development, research, construction and testing of new vehicles, until they are ready for mass production and selling of them to airlines. So, it is possible to gain profits only if the economies of scale are reached.