2. Based on your understanding of the gains from trade which of the following statements accurately characterize how well the payoffs indicated fir four possible outcomes actually reflect a nations welfare?,The payoffs in the upper right and lower left corners of the matrix reflect a nations welfare because the nation with lower tarifas is better off since that nation is more open to trade.The payoffs in the upper right and lower left corners of the matrix do not reflect a nations welfare because tariffs hurt overall total surplus so both countries welfare should decline regardless of who charges high and low tariffs.The payoffs in the upper left and lower right corners of the matrix reflect a nations welfare because they show that trade is benefical and tariffs are a barrier to trade.

Problems & Applications (Ch 17) United States' Decision Low Tariffs High Tariffs Low Tarkits $28 billion, $28 billion $20 billion, $30 billion Mexico's Decision High Tarills $30 billion, $20 billion $25 billion, $25 billion The dominant strategy for the United States is always to choose w tariffs. The dominant strategy for Mexico is always to choose * tariffs, True or False: The Nash equilibrium outcome for trade policy is for the United States to have low tariffs and Mexico to have high tariffs. True False In 1993, the U.S. Congress ratified the North American Free Trade Agreement, in which the United States and Mexico agreed to reduce trade barriers simultaneously. True or False: Given the trade strategy decisions in the table, the United States Is better off and Mexico is worse off with this new trade policy. True