Exam 10: Strategic Trade Policy

-Refer to Figure 10.1, which summarizes the payoffs to two aerospace companies that are considering investing $20 billion to develop a new, technologically advanced, commercial jumbo jet airliner for sale in the global marketplace. Payoffs are in billions of dollars. Suppose that the U.S. government offers Air America a $15 billion production subsidy. If larger payoffs are preferred, the Nash equilibrium strategy profile for this game is:

-Consider the static games depicted in Figures 10.3 and 10.4 which summarize in billions of dollars producer and consumer surpluses from alternative export-subsidy strategies by the U.S. and Japan. If the export subsidies are for the benefit of national welfare, the Cournot-Nash equilibrium strategy profile is an example of a(n):

Starting from a position of free trade, export subsidies will:

-Refer to Figure 10.2, which summarizes the payoffs to three aerospace companies that are considering investing $20 billion to develop a new, technologically advanced, commercial jumbo jet airliner for sale in the global marketplace. Payoffs are in billions of dollars. Suppose that the U.S. and European Union governments offer Air America and Europe Air $2 billion in production subsidies. If larger payoffs are preferred, the Nash equilibrium strategy profile for this game is: I. {Produce, Produce, Produce}. II. {Don't produce, Produce, Produce}. III. {Don't produce, Don't produce, Don't produce}. IV. {Produce, Don't produce, Produce}. V. {Produce, Produce, Don't produce}. Which of the following is correct?

_____ is when a country exports and imports the same, or similar, goods and services.

Starting from a position of free trade, export subsidies will:

-Consider the static games depicted in Figures 10.3 and 10.4 which summarize in billions of dollars producer and consumer surpluses from alternative export-subsidy strategies by the U.S. and Japan. If the export subsidies are for the benefit of overall national welfare, the Cournot-Nash equilibrium strategy profile is:

-Refer to Figure 10.1, which summarizes the payoffs to two aerospace companies that are considering investing $20 billion to develop a new, technologically advanced, commercial jumbo jet airliner for sale in the global marketplace. Payoffs are in billions of dollars. Suppose that the U.S. and European Union governments offer their respective companies $5 billion production subsidies. If larger payoffs are preferred, the Nash equilibrium strategy profile for this game is:

-Consider the static game depicted in Figures 10.4, which summarizes consumer surpluses in billions of dollars from alternative export-subsidy strategies by the U.S. and Japan. If the export subsidies are intended to benefit consumers, the Cournot-Nash equilibrium strategy profile is:

The purpose of an export subsidy is to:

-Refer to Figure 10.1, which summarizes the payoffs to two aerospace companies that are considering investing $20 billion to develop a new, technologically advanced, commercial jumbo jet airliner for sale in the global marketplace. Payoffs are in billions of dollars. Suppose that the U.S. government offers Air America a $5 billion production subsidy. If larger payoffs are preferred, the Nash equilibrium strategy profile for this game is:

Export subsidies may take the form of:

-Refer to Figure 10.1, which summarizes the payoffs to two aerospace companies that are considering investing $20 billion to develop a new, technologically advanced, commercial jumbo jet airliner for sale in the global marketplace. Payoffs are in billions of dollars. Suppose that the U.S. government offers Air America a $4 billion production subsidy. If larger payoffs are preferred, the Nash equilibrium strategy profile for this game is:

A U.S. company and a Japanese company sells an identical product in the U.S. market. The inverse demand equation for this product is P_US = 5 !0.2(Q_USUS + Q_{US J}). Suppose that the best-response functions of the U.S. and Japanese companies are Q_USUS = 10 !0.5Q_{US J} and Q_{US J} = 7.5 !0.5Q_USUS, respectively. Consumer surplus in the U.S. market is:

A U.S. company and a Japanese company sells an identical product in the Japanese market. The inverse demand equation for this product is P_J = 10 !0.5(Q_JUS + Q_{J J}). Suppose that the best-response functions of the U.S. and Japanese companies are Q_JUS = 6 !0.5Q_{J J} and Q_{J J} = 9 !0.5Q_JUS, respectively. Consumer surplus in the Japanese market is:

Suppose that the demand for a product produced and sold by a single U.S. firm in the U.S. market is Q_USUS = 10 !2P_US, where output is in million of units. If the marginal cost of production is $2 per unit, the value of consumer surplus in the U.S. market is:

-Refer to Figure 10.1, which summarizes the payoffs to two aerospace companies that areconsidering investing $20 billion to develop a new, technologically advanced,commercial jumbo jet airliner for sale in the global marketplace. Payoffs are in billionsof dollars. If larger payoffs are preferred, the Nash equilibrium strategy profile for this game is:

A U.S. company and a Japanese company sells an identical product in the Japanese market. The inverse demand equation for this product is P_J = 5 !0.2(Q_JUS + Q_{J J}). Suppose that the best-response functions of the U.S. and Japanese companies are Q_JUS = 5 !0.5Q_{J J} and Q_{J J} = 7.5 !0.5Q_JUS, respectively. Consumer surplus in the Japanese market is:

Suppose that the demand for a product produced and sold by a single U.S. firm in the U.S. market is Q_USUS = 10 !2P^US, where output is in million of units. If the marginal cost of production is $2 per unit, the profit-maximizing level of output is:

-Refer to Figure 10.2, which summarizes the payoffs to three aerospace companies that are considering investing $20 billion to develop a new, technologically advanced, commercial jumbo jet airliner for sale in the global marketplace. Payoffs are in billions of dollars. Suppose that the U.S. government offers Air America a $2 billion production subsidy. If larger payoffs are preferred, the Nash equilibrium strategy profile for this game is: I. {Produce, Produce, Produce}. II. {Don't produce, Produce, Produce}. III. {Don't produce, Don't produce, Don't produce}. IV. {Produce, Don't produce, Produce}. V. {Produce, Produce, Don't produce}. Which of the following is correct?