Microeconomic issue Assignment Example | Topics and Well Written Essays - 750 words

Microeconomic issue - Assignment Example Lowering of operational costs will mean that the company can offer better prices for the customers which will increase sales. The increase in sales will translate to more profits for the airline. Marketing costs will be lower as lower prices will act as a marketing tool for the airline. The aircrafts will basically operate and function in the same way that other non-biofuels models do. Customers will not know the difference save for the fact that the company will use this opportunity to advise them of its efforts at environmental campaigns at lowering green house gases. The market forces of demand and supply are clearly portrayed in the rising demand for farm waste and animal fats. These were products were formerly considered as waste material have become raw material for bio-fuel production. The demand for development in biofuels that are bio-degradable has become a global trend. All transport industries use fossil fuels to power their engines. The forecasted diminishing fossil fuel reserves across the world have created a demand for non-fossil fuels. The aviation industry is unique because it cannot use electricity as an alternative source of power. This has prompted manufacturers to venture into other viable alternatives of fuel production. Airlines are creating a market demand for bio-fuels as they strive to cut operation costs as well as conform to environmental regulations. The demand for bio-fuel also creates demand for oil refineries that produce it. This will create employment opportunities and increase tax revenues for the government. Inc rease in employment creates an increase in spending power and a lowering of welfare which is a good stimulant for the local as well as national economy. The challenges faced by bio-fuels manufacturers is the limited availability of the raw materials of farm waste and animal fats. This negative