333_HW2 - Name:_ PSU ID:_ PSU email:_ Econ 333 Professor...

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Name:________________________  PSU ID:____________________  PSU  email:___________________ Econ 333 Professor McCann HW #2: Ch. 7, 8, 12, 13 All answers are due in Class on 10/29/08.  Late assignments will not be accepted.  Work must be typed, except for graphs which may be neatly drawn.  When verbal  explanations are requested, limit yourself to a few concise sentences.  1. Boeing and Airbus are the world’s only major producers of large, wide-bodied  aircrafts.  But with the cost of fuel increasing and changing demand in the airline  industry, the need for smaller regional jets has increased.  Suppose that both  firms must decide whether they will produce a smaller plane.  We will assume  that Boeing has a slight cost advantage over Airbus in both large and small  planes, as is shown in the following payoff matrix (in millions of U.S. dollars).  Assume that each producer chooses to produce only large, only small, or no  planes at all. AIRBUS
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333_HW2 - Name:_ PSU ID:_ PSU email:_ Econ 333 Professor...

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