Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can u help me to answer this question. 4. Strategic trade policy Suppose there are only two producers of electronics in the world, HighTech in

Can u help me to answer this question.

image text in transcribed
4. Strategic trade policy Suppose there are only two producers of electronics in the world, HighTech in the United States and Inobeshon in Japan. The following hypothetical payoff matrices show the prots (in millions of dollars) for each company. In the absence of subsidies, if only one company makes semiconductors, it receives a prot of $85 million. If both companies decide to produce, they each lose $4 million. When a company decides not to produce, it earns zero prot. lnobeshon Produce Not Produce Produce -4, -4 85. 0 HighTech Nol Produce 0, 85 D, 0 Suppose that Japan considers electronics a strategic industry and gives lnobeshon a $7 million subsidy if it produces. Fill in the cells of the following payoff matrix to reect the $7 million subsidy. lnobeshon Prod uoe Not Produce ....... l:1.i | l u l HighTech With a $7 million subsidy, regardless of whether HighTech produces or not, lnobeshon V produce if it wants to maximize its prot. True or False: Because lnobeshon will enter the market if given a $7 million subsidy, HighTech should not produce in this industry. 0 True 0 False

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of economics

Authors: N. Gregory Mankiw

6th Edition

978-0538453059, 9781435462120, 538453052, 1435462122, 978-0538453042

More Books

Students also viewed these Economics questions

Question

what are signs of NPD

Answered: 1 week ago

Question

2. List and describe four determinants of productivity.

Answered: 1 week ago

Question

Explain exothermic and endothermic reactions with examples

Answered: 1 week ago

Question

Write a short note on rancidity and corrosiveness.

Answered: 1 week ago