9. The profit functions of two airplane manufacturers, the European firm Airbus and the American firm...

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9. The profit functions of two airplane manufacturers, the European firm Airbus and the American firm Boeing, are A = B = 11/12 1 2 B + F A + G, where A is the profits of Airbus, B is the profits of Boeing, F is a subsidy from the governments of Europe to Airbus, and G is a subsidy from the U.S. government to Boeing. (a) Express these two equations as a matrix system with A and B as the endoge- nous variables and F and G as the exogenous variables. (b) Determine the solution if each government provides a subsidy of $100 million. (c) What happens to the profits of each firm if the European governments increase their subsidy to $200 million, while the U.S. government keeps its sub- sidy equal to $100 million? 9. The profit functions of two airplane manufacturers, the European firm Airbus and the American firm Boeing, are A = B = 11/12 1 2 B + F A + G, where A is the profits of Airbus, B is the profits of Boeing, F is a subsidy from the governments of Europe to Airbus, and G is a subsidy from the U.S. government to Boeing. (a) Express these two equations as a matrix system with A and B as the endoge- nous variables and F and G as the exogenous variables. (b) Determine the solution if each government provides a subsidy of $100 million. (c) What happens to the profits of each firm if the European governments increase their subsidy to $200 million, while the U.S. government keeps its sub- sidy equal to $100 million? 9. The profit functions of two airplane manufacturers, the European firm Airbus and the American firm Boeing, are A = B = 11/12 1 2 B + F A + G, where A is the profits of Airbus, B is the profits of Boeing, F is a subsidy from the governments of Europe to Airbus, and G is a subsidy from the U.S. government to Boeing. (a) Express these two equations as a matrix system with A and B as the endoge- nous variables and F and G as the exogenous variables. (b) Determine the solution if each government provides a subsidy of $100 million. (c) What happens to the profits of each firm if the European governments increase their subsidy to $200 million, while the U.S. government keeps its sub- sidy equal to $100 million?

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a Expressing the equations as a matrix system Let x A BT b... View the full answer