2. Now suppose European government gives $25 million export subsidy to Airbus. Airbus Not produce Produce $20 $0 50 million Produce -$5 $100 million million Boeing $125 $0 06 million $0 $0 Not produce a. Is there a Nash equilibrium after the subsidy? Is so, mark the Nash equilibrium in payoff matrix. b. Complete in the following welfare changes form: Rise in producer profits: +125 Fall in government revenue: Net effect on European welfare:

2. Now suppose European government gives $25 million export subsidy to Airbus. Airbus Not produce Produce $20 $0 50 million Produce -$5 $100 million million Boeing $125 $0 06 million $0 $0 Not produce a. Is there a Nash equilibrium after the subsidy? Is so, mark the Nash equilibrium in payoff matrix. b. Complete in the following welfare changes form: Rise in producer profits: +125 Fall in government revenue: Net effect on European welfare:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. Now suppose European government gives $25 million export subsidy to Airbus.
Produce Airbus Not produce
$20
$0
million
Produce
-$5
$100
million
million
Boeing
$125
$0
million
Not produce
$0
a. Is there a Nash equilibrium after the subsidy? Is so, mark the Nash equilibrium in
payoff matrix.
b. Complete in the following welfare changes form:
Rise in producer profits: +125
Fall in government revenue:
Net effect on European welfare:

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