Managerial Economics (ECON 6350-01V Summer 2024 Mod To be submitted in groups of students by the deadline) Case 3 Chapter 11 Activity Complete and Submit a Case Study Instructions Government Aircraft Subsidies Ancraft manufacturers lobby their governments for subsidies, which they use to better compete wkberival tums. Airbus SAS, based in Europe. and Boeing Co., based in the United States, are the only two majer manufacturers of large commercial jet aircraft manufacturers, France, Germany Spam ade the United Kingdom subsidize Airbus, which competes in the wide body aircraft market, with Boeing, The LIS. yovernment neches the European subsidies to Airbus despite, giving lucrative military contracts to Boeing which ile Europeans view as implicit subsidies. This government's generosity does mol magically appear. Managers at both Boeing and Airbus lobby strenuously for this support For example In 3017-2018, Booing spent over $24 million on lobbying and was represented by 105 lobbyists, 76 of whom proviously held government jobs. Washington and the European Union hie repeatedly charged each other before the World Trade Organization (WTO) with illegally subsidizing their respective aircraft manufacturers. In 2010 the WTO ruled that Airbus received improper subsidies for its A380 superjumbo jet and several other aircraft, hurting Boeing, as the United States charged in 2005. In 2012 the WTO ruled that Boeing and Airbus received improper subsidies. In 2015, the WTO agreed to investigato a complaint about Washington State subsidies to Boeing. and Boeing questioned government loans to Airbus. Please see updates in Perloff and Brander (2020). Thus, the cycle of subsidies, charges, agreements. and new subsidies continues A. If only one government subsidizes its firm, what is the effect on price and quantities in the aircraft manufacturing market? 140 points B. What happens if both governments subsidize their firms? [IN potuts] C. What equilibrium concept is used in your responses to A and B above? In the case of two firms, which variable appears in the vertical axis and which appears in the horizontal axis. when each airline chooses to find out how many passengers to carry