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Boeing and Airbus compete in the airliner business. The next generations of jets are being designed, but neither company knows whether they will receive government subsidies to produce the jets. Boeing and Airbus view the strategic choices as follows with the profits they can expect with or without $400M subsidies from their respective governments:AirbusNo subsidy (0.5) Subsidy (0.5)Boeing No subsidy (0.5) $100M , $100M $-200M , $500MSubsidy (0.5) $500M , $-200M $300M , $300M
Reading the table example: If Boeing proceeds without subsidy and Airbus receives the subsidy, Boeing loses $200M and Airbus has $500M profits. Assume a 1-year project with no time value of money and all development costs are sunk.Boeing believes there is a 50% chance that either government will grant the subsidy, and that the subsidy decision will be made simultaneously and independently, with no collusion between governments. Boeing must invest in the project before they know if the subsidy will be granted.A. Should Boeing invest? Why or why not?B. What is the value to Boeing of having a spy within the French government (but not the U.S. government) who can tell them before they commit to the program if Airbus will receive a subsidy? (Give the expected dollar value, ignoring ethical or legal liability concerns.)C. Is the subsidy a good investment on the part of the respective governments?
Assume that the MPC is .8 and that $10 trillion of real GDP is currently being demanded. The government wants to increase real GDP demanded to $11 trillion.
Elucidate possible consequences of failing to properly disclose certain items in financial statements.
Assume that Nancy Pelosi declares that clay fire pits are causing global warming, and demand for fire pits shrinks substantially in the U.S.
In the early 1980s, interest rates on long-term debt were at remarkable levels - above 15% with some even higher. Within a decade, rates had dropped precipitously. I have a couple of questions about that What would the effect of a decline in inte..
The description of both your environmental also internal scanning process, comprising what factors you considered and why will be in your MS Word file.
Utilize the marginal productivity theory of labor demand to predict the impact on the firm's employment level of the following events.
Discuss ways the Fed's objective function can be used with an economic model to evaluate alternative monetary policies. Discuss ways that economists could use the Phillip's curve to create better economic policy than we currently have.
Wy might a parent company like McDonald Hilton choose to franchise its local outlet rather than own them and staff them with employees In many smaller cities all McDonalds franchise are owned by the same franchise.
A popular magazine reports that wrist watches are becoming the highest fashion craze. What affect will this have on the demand for watches, and what will happen to the price and quantity of watches sold on the market
A number of companies exist that specialize in "payday loans." Payday loans are small loans often for a few hundred dollars or less that are made to low-income borrowers. Often these borrowers have poor credit histories and few assets and would ha..
Go to the Bureau of Economic Analysis Web site, and access the BEA interactively through selecting National Accounts and then National Income and Product Account Tables
Currently, the island of Guam does not have a minimum wage need but uses the United States minimum wage as a reference. Give a theoretical justification for why imposition of a $5.15 minimum wage.
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