EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Question
Chapter 13, Problem 8SP
(a)
To determine
Dominant strategy of US.
(b):
To determine
Dominant strategy of China.
(c):
To determine
Nash Equilibrium in the game.
(d):
To determine
Outcomes of the cooperative game.
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Students have asked these similar questions
Consider trade relations between Canada and Mexico. Assume that the leaders of the two countries believe the payoffs
to alternative trade policies are as follows:
Canada High Tariffs
Low Tariffs
Mexico
High Tariffs
Canada trade value = $65
Mexico trade value = $75
Canada trade value = $35
Mexico trade value = $285
Refer to Table 17-4. When this game reaches a Nash equilibrium, what will the value of trade flow benefits be?
Canada $35 and Mexico $285
Canada $65and Mexico $75
Canada $130 and Mexico $5
Low Tariffs
Canada trade value = $140
Mexico trade value = $5
Canada trade value = $130
Mexico trade value = $275
Canada $140 and Mexico $275
Suppose China and the US are deciding whether to join an international agreement to mitigate climate change.
The matrix below contains payoffs that represent each country’s net benefit from their decisions. Use this information to answer Question 24.
CHINA
USA
Join Agreement
Do Not Join Agreement
Join Agreement
(100,100)
(0,125)
Do Not Join Agreement
(125,0)
(25,25)
[24] What does each country decide to do in a Nash equilibrium? AND What is the efficient outcome?
Nash:
Efficient:
Consider trade relations between the United States and Mexico. Assume that the leaders of the two countries believe the payoffs to alternative trade policies are shown in the following payoff matrix:
United States' Decision
Low Tariffs
High Tariffs
Mexico's Decision
Low Tariffs
$28 billion, $28 billion
$20 billion, $30 billion
High Tariffs
$30 billion, $20 billion
$25 billion, $25 billion
The dominant strategy for the United States is always to choose 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…
Chapter 13 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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Similar questions
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