Exam 10: Strategic Trade Policy

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. The Cournot-Nash equilibrium {Q_JUS, Q_{J J} } in the Japanese market 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 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. The price of this product in the U.S. market is:

-Consider the static game depicted in Figures 10.3, which summarizes producer surpluses in billions of dollars from alternative export-subsidy strategies by the U.S. and Japan. If the export subsidies are intended to benefit producers, the Cournot-Nash equilibrium strategy profile 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 = 8 !0.4(Q_USUS + Q_{US J}). Suppose that the best-response functions of the U.S. and Japanese companies are Q_USUS = 7.5 !0.5Q_{US J} and Q_{US J} = 9.375 !0.5Q_USUS, respectively. The price of this product in the U.S. 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 market price per unit 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. The price of this product in the Japanese 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 = 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. The Cournot-Nash equilibrium {Q_{J US}, Q_JJ} in the Japanese market is:

A U.S. company and a Japanese company sells an identical product in the Japanesemarket. 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. The price of this product in the Japanese market 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 this game is played a finite number of times with a certain end, maximizing national welfare:

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. The Cournot-Nash equilibrium {Q_USUS, Q_{US J} } in the U.S. market is:

The benefits of an export subsidy to a domestic producer are:

-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. 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?

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 = 8 !0.4(Q_USUS + Q_{US J}). Suppose that the best-response functions of the U.S. and Japanese companies are Q_USUS = 7.5 !0.5Q_{US J} and Q_{US J} = 9.375 !0.5Q_USUS, respectively. The Cournot-Nash equilibrium {Q_USUS, Q_{US J} } in the U.S. market 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 all three countries offer $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?