ABSTRACT
The subject of economics is generally divided into two major sections: microeconomics and macroeconomics. The air transport industry plays a substantial role in the national economy, and government plays an important role in aviation safety, security, and the operations of critical infrastructure. This chapter introduces the reader to the economic way of thinking in the context of aviation. It focuses more on microeconomics, which traces the logic of incentives on decision-making by individual consumers and business firms. It examines the key economic concepts of scarcity, choice, and opportunity cost. The basic economic framework can then be applied to issues in aviation, including the role of government in aviation, deregulation, operating costs, foreign operations, and certification. The chapter discusses the differences between microeconomics and macroeconomics, and how each might affect aviation managers in terms of variables they could control and variables to which they had to devise an optimal reaction.
