Question: 7.1 Using our duopoly airlines example, (falsely) assume that the corporation that owns United Airlines is located in one country and Americans is located in

7.1 Using our duopoly airlines example, (falsely)

assume that the corporation that owns United Airlines is located in one country and American’s is located in another.

a. If only United’s government provides a $48 per passenger subsidy, determine the equilibrium prices, quantities, and profits.

b. Now suppose that both American and United receive a subsidy of $48 per passenger. Discuss how this equilibrium differs from the one in which only one firm is subsidized. A

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