Refer to above figure. Suppose the European government provides Airbus with a subsidy of 4 for each airplane sold, and that the subsidy convinces Boeing to exit the Hungarian market. Now Airbus would be the monopolist in this market.
What price would they charge, and what would be their total profits?
Question 2
The relationship that implies that the nominal interest rate is equal to the real interest rate plus expected inflation is called the
A) exchange rate equation.
B) Fisher equation.
C) interest rate equation.
D) term structure of interest rates.
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